Ga. Code Ann. tit. 7 | Title 7 — Banking and Finance

Official Code of Georgia Annotated — Title 7. Banking and Finance

Snapshot of the Georgia code as mirrored by FindLaw, current as of 2024-03-28.

Chapter 1 Financial Institutions

§ 7-1-1

This chapter shall be known and may be cited as the “Financial Institutions Code of Georgia” (hereinafter called “this chapter”).

§ 7-1-2

The General Assembly finds and declares that the sound, efficient, and responsive operation of financial institutions is essential to the livelihood of the people of this state and to the stability and growth of the economy of this state and region and vitally affects the public interest.

§ 7-1-3

(a) The underlying objectives of this chapter are to provide for:

(1) Safe and sound operation of financial institutions;

(2) Proper conservation of the assets of financial institutions;

(3) Public confidence in financial institutions;

(4) Protection for the interests of the depositors, creditors, and shareholders of financial institutions;

(5) Service by financial institutions responsive to the needs and convenience of depositors, borrowers, and other customers and conducive to economic progress and, to these ends, opportunities to expand services and facilities;

(6) Appropriate competition among financial institutions and between them and other financial organizations including those organized under the laws of the United States, other states, and foreign countries;

(7) Delegation to the department of rule-making power and administrative discretion in order that supervision of financial institutions may be flexible and responsive to changes in economic conditions and banking, fiduciary, and other commercial practices;

(8) Opportunity for management of financial institutions to exercise their business judgment;

(9) Simplification and modernization of the law governing banking, trust, and other financial institutions; and

(10) As to other entities under the supervision of the department that are not financial institutions, including check cashers and mortgage lenders and brokers, to provide for:

(A) Supervision and examination of their business affairs to ensure that they operate in a manner consistent with state law;

(B) Protection of the interests of consumers and service by these entities which is responsive to their consumers; and

(C) Simplification and modernization of the law that governs these entities, together with the delegation of rulemaking power and administrative discretion to the department to carry out its responsibilities, keeping in mind the need for economic and technological progress in the industry.

(b) This chapter shall be construed and applied to promote the foregoing objectives and they shall constitute standards to be observed by the department in promulgating rules and regulations, issuing cease and desist orders, conducting examinations, and exercising discretionary powers and in connection with all other matters embraced by this chapter.

§ 7-1-4

Subject to additional definitions contained in the subsequent provisions of this chapter, as used in this chapter, the term:

(1) “Affiliate” means any corporation, business trust, association, or other similar organization:

(A) Of which a financial institution, directly or indirectly, owns or controls either a majority of the voting shares or more than 50 percent of the number of shares voted for the election of its directors, trustees, or other persons exercising similar functions at the preceding election or controls in any manner the election of a majority of its directors, trustees, or other persons exercising similar functions;

(B) Of which control is held, directly or indirectly, through stock ownership or in any other manner by the shareholders of a financial institution who own or control either a majority of the shares of such financial institution or more than 50 percent of the number of shares voted for the election of directors of such financial institution at the preceding election or by trustees for the benefit of the shareholders of any such financial institutions;

(C) Of which a majority of its directors, trustees, or other persons exercising similar functions are directors of any one financial institution; or

(D) Which owns or controls, directly or indirectly, either a majority of the shares of a financial institution or more than 50 percent of the number of shares of a financial institution voted for the election of directors of a financial institution at the preceding election or controls in any manner the election of a majority of the directors of a financial institution or for the benefit of whose shareholders or members all or substantially all the capital stock of a financial institution is held by trustees.

(1.5) “Agency relationship” is a relationship created by a contractual agreement whereby a financial institution agrees with a third party, including another financial institution, to act in a principal or agent capacity to facilitate the conduct of activities related to the business of banking, which activities are currently authorized under this chapter or under other applicable law.

(2) “Agreement for the payment of money” means a consensual monetary obligation not in the form of an evidence of indebtedness or an investment security and includes an account or general intangible as defined in Code Section 11-9-102.

(3) Reserved.

(4) “Articles” means original or restated articles of incorporation or articles of consolidation and all the amendments thereto, including articles of merger or conversion, and also includes what heretofore have been designated by law as certificates of incorporation or charters and, in case of foreign corporations, whatever documents are equivalent to “articles” in their jurisdiction of incorporation. After an amendment restating articles in their entirety, the “articles” shall not include any prior documents, and the certificate of amendment issued by the Secretary of State shall so state.

(5) “Assets” means all the property and rights of every kind of a financial institution.

(6) “Attorney” means an attorney at law who is regularly retained as counsel for a financial institution or who is a partner or associate of a firm which is regularly retained as counsel for a financial institution.

(7) “Bank” means a corporation existing under the laws of this state on April 1, 1975, or organized under this chapter and authorized to engage in the business of receiving deposits withdrawable on demand or deposits withdrawable after stated notice or lapse of time; “bank” shall also include national banks located in this state for the purpose of Part 6 of Article 2 of this chapter, relating to deposits, safe-deposit agreements, and money received for transmission, and Article 8 of this chapter, relating to multiple deposit accounts; provided, however, that the term “bank” shall not include a credit union, a savings and loan association, or a licensee under Article 4 of this chapter, but shall include a federal or state credit union for the purposes of Part 6 of Article 2 of this chapter, provided that this inclusion is not intended to grant or expand any powers to credit unions not authorized in Part 6 of Article 2 of this chapter or by other law.

(8) Reserved.

(9) “Capital debt” means the sum of the face value of the subordinated securities of a financial institution issued pursuant to Code Section 7-1-419.

(10) “Capital stock” means the sum of the par value of the authorized shares which have been issued and remain outstanding of a bank or trust company.

(11) Reserved.

(12) “Commercial bank” means a bank authorized to hold deposits subject to check.

(13) “Commissioner” means the commissioner of banking and finance.

(14) “Corporation” means a corporation, whether profit or nonprofit, and includes a professional corporation or joint-stock association, organized under the laws of this state, the United States, or any other state, territory, or dependency of the United States or under the laws of a foreign country.

(15) “Credit union” means a cooperative society incorporated under the laws of this state on April 1, 1975, or organized under Article 3 of this chapter and existing for the twofold purpose of promoting thrift among its members and creating a source of credit for them at reasonable rates.

(16) “Department” means the Department of Banking and Finance.

(17) “Depositor” means any person or corporation who shall deposit money or items for the payment of money in any financial institution, which funds are subsequently (allowing time for collections) withdrawable either on demand or after a stated notice or lapse of time, whether interest is allowed thereon or not, and shall also include:

(A) Holders of demand and time certificates of deposit;

(B) Owners of certified or cashiers' checks and checks purchased from a licensee under Article 4 of this chapter; and

(C) Shareholders in credit unions, federal credit unions, and savings and loan associations to the extent that funds paid in by them are withdrawable within the terms of this definition.

(18) “Evidence of indebtedness” means a note, draft, or similar negotiable or nonnegotiable instrument.

(19) “Federal credit union” means an association organized pursuant to the Federal Credit Union Act, 12 U.S.C. Sections 1750-1795i.

(20) “Fiduciary” means an executor, administrator, guardian, receiver, trustee, assignee for benefit of creditors, or one acting in a similar capacity.

(21) “Financial institution” means:

(A) A bank;

(B) A trust company;

(D) A credit union;

(E) A corporation licensed to engage in the business of money transmission in this state on April 1, 1975, or so licensed pursuant to Article 4 of this chapter;

(F) Business development corporations existing on April 1, 1975, pursuant to the former “Georgia Business Development Corporation Act of 1972,” approved April 3, 1972 (Ga. L. 1972, p. 798), or organized pursuant to Article 6 of this chapter;

(G) An international bank agency doing business in this state on April 1, 1975, pursuant to the former “International Bank Agency Act,” approved April 6, 1972 (Ga. L. 1972, p. 1140), or authorized to do business in this state pursuant to Article 5 of this chapter;

(H) In addition, as the context requires, a national bank, savings and loan association, or federal credit union for the purpose of the following provisions:

(i) Code Section 7-1-2, relating to findings of the General Assembly;

(ii) Code Section 7-1-8, relating to supplementary principles of law;

(iii) Code Section 7-1-37, relating to restrictions on officials and personnel;

(iv) Code Section 7-1-70, relating to disclosure of information;

(v) Code Section 7-1-90, relating to judicial review of department actions;

(vi) Code Sections 7-1-111 and 7-1-112, relating to emergency closings and business restrictions;

(vii) Paragraph (3) of subsection (a) of Code Section 7-1-394, relating to criteria to be considered in approving new banks;

(viii) Code Section 7-1-840, relating to criminal prosecutions; and

(ix) Code Section 7-1-841, relating to application of Title 16 provisions;

(I) A bank holding company as defined in Code Section 7-1-605 for the purposes of Code Sections 7-1-61, 7-1-71, and 7-1-91;

(J) Banks chartered by states other than Georgia for the purposes of paragraph (10) of Code Section 7-1-261, relating to agency relationships;

(K) Federal credit unions for the purposes of Part 6 of Article 2 of this chapter, relating to deposits, safe-deposit agreements, and money received for transmission, and Article 8 of this chapter, relating to multiple-party accounts; and

(L) Banks and credit unions chartered by states other than Georgia, national banks, federal credit unions, and federal savings and loan associations for the purposes of paragraph (1) of Code Section 7-1-650, provided that such institutions have federal deposit insurance.

(22) “Insolvency” means:

(A) Inability to meet liabilities as they become due in the regular course of business; or

(B) Insufficiency in actual cash market value of assets to pay liabilities to depositors and other creditors.

(22.5) “Main office” means the principal banking location of a bank as such location appears in the records of the Department of Banking and Finance. If a bank does not designate a main office, the department shall choose a banking location of the bank to be the main office.

(23) “National bank” means a national banking association organized pursuant to 12 U.S.C. Section 21-215b.

(24) “Net worth” shall have the same meaning as set forth in 12 C.F.R. 702.2 and as reported in the credit union's most recent call report required to be filed under 12 C.F.R. 741.6. If significant capital changes occur after the filing of the call report which causes the net worth to increase or decrease by 5 percent or more, then the net worth shall be immediately recalculated at the time of the capital change and it shall be effective until the filing of the next call report.

(25) “Paid-in capital” means the sum of the considerations received in the sale or exchange of shares of a bank or trust company in excess of the amount of the capital stock and includes the surplus, if any, created by or arising out of a reduction of the capital stock of such financial institution effected in a manner permitted by law, any amounts properly regarded as surplus of such financial institution on April 1, 1975.

(26) “Person” means an individual, trust, general or limited partnership, unincorporated association (except a joint-stock association), or any other form of unincorporated enterprise.

(27) “Principal court” means the superior court of the county where the registered office of a financial institution is located or, in the case of a proposed financial institution, will initially be located, as shown in its articles or application for authority to commence business. Whenever under this chapter the principal court is authorized to take any action but lacks, because of constitutional restrictions, jurisdiction or venue over the person or corporation against which such action is to be taken or over the subject matter which is to be affected by its action, then such action may be taken by the superior court of this state in which jurisdiction and venue are proper or, in the absence of any such court, by a court of another state, a federal court, or a court of a foreign country in which jurisdiction and venue are proper.

(28) “Public body” means an agency, authority, board, commission, instrumentality, or similar entity which is part of or connected with the government or political subdivision referred to in the context.

(29) “Public sale” means a sale:

(A) Held at a place reasonably available to persons who might desire to attend and submit bids;

(B) At which those attending shall be given the opportunity to bid on a competitive basis;

(D) Except as otherwise provided in Title 11 for advertising or dispensing with the advertising of public sales, of which notice is given by advertisement once a week for two weeks in the newspaper in which the sheriff's advertisements are published in the county where the sale is to be held, and which notice shall state the day and hour, between 9:00 A.M. and 5:00 P.M., and the place of sale and shall briefly identify the goods to be sold.

(29.5) “Registered agent” means the person or corporation on whom service of process is to be made in a proceeding against a bank. Written notice of any change in the identity or address of a bank's registered agent must be delivered to the Department of Banking and Finance in addition to and at the same time as such notice is filed with the Secretary of State. The provisions of Part 1 of Article 5 of Chapter 2 of Title 14 shall apply to any such registered agent.

(30) “Registered office” means the location of the registered agent and may be a banking location.

(30.5) “Retained earnings” means the balance of the net profits, income, gains, and losses from the date of incorporation or from the latest date when a deficit was last eliminated of a financial institution whose articles were granted by the Secretary of State and excludes subsequent distributions to shareholders and transfers to appropriated retained earnings. Retained earnings shall also include any portion of paid-in capital or appropriated retained earnings or, in the case of other organizations, equivalent funds, allocated to retained earnings in mergers, consolidations, or acquisitions of all or substantially all of the property or assets of another such financial institution or other organization permitted by law.

(31) “Savings and loan association” means an association created pursuant to the Home Owners' Loan Act, 12 U.S.C. Sections 1461-1470, including a federal savings bank.

(32) “Savings bank” means a state chartered bank that has powers no greater than a state bank as provided in this chapter but that may lend and invest in commercial loans in an aggregate amount that does not exceed 50 percent of its total assets. Such bank may elect, subject to department approval, or the department may require that the savings bank comply with selected provisions of the Home Owners' Loan Act that in the judgment and discretion of the department would be consistent with the charter and purpose of the bank. For the purposes of this paragraph, the term “commercial loan” means a loan for business, commercial, corporate, or agricultural purposes.

(33) “Shareholder” means the owner of shares in a financial institution.

(34) “Shares” means the units into which the proprietary interest of the institution is divided.

(34.1) “State savings and loan association” means a bank which pays interest on substantially all of its depositors' funds and the majority of whose loans are secured by first liens on or other security interest in residential real property or upon the security of its deposits.

(35) “Statutory capital base” means the sum of the common equity tier 1 capital, as defined by applicable federal law, and the allowances for credit losses, as defined by applicable federal law or guidance, as reported in the bank's most recent Consolidated Report of Condition and Income; provided, however, that the department may enact regulations to phase in the revision to this definition for those banks that will have a decreased statutory capital base as of July 1, 2017. If significant capital changes occur after the filing of the Consolidated Report of Condition and Income which causes the common equity tier 1 capital to increase or decrease by 5 percent or more, then the statutory capital base will be immediately recalculated at the time of the capital change and it will be effective until the filing of the next Consolidated Report of Condition and Income.

(36) “Subject to check” includes withdrawal or transfer by negotiable or transferable order or authorization even though such order or authorization does not constitute a check under Code Section 11-3-104.

(37) “Subsidiary” means a corporation controlled by a financial institution which owns at least a majority of its voting shares.

(38) “Third-party payment service” means any system employing checks, drafts, computer transmissions, or other techniques by which a depositor may effect payment to third parties.

(39) “Treasury shares” means shares of a financial institution which have been issued, have been subsequently acquired by, and belong to the financial institution otherwise than in a fiduciary capacity and have not been canceled. Such shares shall be deemed to be “issued” but not “outstanding” shares.

(40) “Trust company” means a corporation existing under the laws of this state on April 1, 1975, or organized under this chapter and authorized by law to engage in the business of acting as a fiduciary.

§ 7-1-5

Whenever it shall appear to the department that any person or corporation is conducting business as a financial institution without authority pursuant to this chapter, the department may determine, for purposes of Parts 4, 7, 8, and 9 of this article, that such person or corporation is a financial institution as defined in paragraph (21) of Code Section 7-1-4.

§ 7-1-6

Except as otherwise expressly provided:

(1) Any notice required to be given under this chapter may be delivered in person or by first-class mail or statutory overnight delivery to the last known address of the person or corporation or to the registered office of the corporation. If the notice is sent by first-class mail or statutory overnight delivery, it shall be deemed to have been given when deposited in the United States mail or with a commercial firm regularly engaged in the business of document delivery;

(2) In addition to the methods of notice provided for in paragraph (1) of this Code section, notice of meetings, including annual and special meetings, may be delivered by electronic transmission, including but not limited to e-mails, pursuant to Code Section 14-2-141;

(3) If such notice is of a meeting, it shall specify the place, day, and hour of the meeting. Notice of a meeting of shareholders shall be given not less than ten nor more than 60 days before the meeting. Notice of a special meeting shall specify the general nature of the business to be transacted;

(4) Any written notice required to be given under this chapter need not be given if there is a waiver thereof in writing signed by the person or on behalf of the corporation entitled to such notice or by their proxy, whether before or after the time when the notice would otherwise be required to be given, provided that no such waiver shall apply by its terms to more than one required notice;

(5) Attendance of a person, either in person or by proxy, at any meeting shall constitute a waiver of notice of such meeting, except where a person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting was not lawfully called or convened; and

(6) If the language of a proposed resolution or a proposed plan requiring approval by shareholders is included in a written notice of a meeting of shareholders, the shareholders' meeting considering the resolution or plan may adopt it with such clarifying or other amendments as do not enlarge its original purpose without further notice to shareholders not present in person or by proxy.

§ 7-1-7

(a) Except as otherwise expressly provided, any notice or advertisement required by this chapter to be published in a newspaper shall be published once a week for four weeks in the newspaper which is, on the date of the first such publication, the official organ (as determined pursuant to Code Section 9-13-142) of the county which is or is to be the location of the main office of the financial institution.

(b) The department may waive or modify any requirement to publish a notice:

(1) In order to facilitate a merger, consolidation, or sale of assets when one of the parties is a failed or failing bank as determined by the commissioner;

(2) Whenever it determines that the public benefit is not significantly served by a second or subsequent publication in a situation where a series of transactions would otherwise require multiple publications;

(3) Where a similar publication required by another state or federal regulator serves substantially the same purpose;

(4) By regulation or order, whenever it determines that a lesser number of publications will reduce administrative burden and will adequately serve the public benefit of the notice; or

(5) For other reasons of regulatory parity.

(c) The department may require proof of publication or modified publication having been completed prior to consummation of the underlying transaction.

§ 7-1-8

Unless expressly or impliedly displaced by this chapter, general principles of common law shall apply to financial institutions.

§ 7-1-9

The General Assembly shall at all times have power to prescribe such regulations, provisions, and limitations as it may deem advisable, which regulations, provisions, and limitations shall be binding upon financial institutions that are subject to this chapter. The General Assembly shall have the power to amend, repeal, or modify this chapter at pleasure.

§ 7-1-10

(a) The rules of statutory construction contained in Chapter 3 of Title 1 shall apply to this title.

(b) Unless otherwise specifically indicated and to the full extent permitted by the Constitution of Georgia, any reference in this title to an existing statute or regulation shall mean to such statute or regulation as has been or may in the future be amended or have material added to it. If in any case such construction is not constitutionally permissible, such reference shall mean to the statute or regulation as it existed on January 1, 2023.

(c) Any reference in this title to an action by a superior court or other court shall authorize a judge of such court to take such action in term or in vacation, whether present in the county or absent from it.

§ 7-1-30

There is created the Department of Banking and Finance.

§ 7-1-31

(a) The head of the department shall be the commissioner who shall exercise supervision and control over all divisions and employees of the department.

(b) The commissioner shall be appointed by the Governor, by and with the advice and consent of the Senate, for a four-year term. The initial term of the commissioner shall terminate on January 20, 1976. Each succeeding term of office shall be for four years commencing on the expiration date of the previous term. Beginning July 1, 1999, the salary of the commissioner shall be set by the Governor.

§ 7-1-32

The commissioner shall be of good moral character, shall not have been convicted in any court of competent jurisdiction of any crime involving moral turpitude, shall have been a citizen of this state for not less than three years, and shall have attained the age of 30 years but be less than 70 years. In addition, the commissioner shall have had at least five years' experience as an active officer of a bank or national bank or as an examiner or other officer in a federal or state agency supervising such institutions.

§ 7-1-33

The commissioner may be suspended or removed by the Governor whenever the Governor has in his judgment trustworthy information that the commissioner is insane or has absconded or grossly neglected his duties or is guilty of conduct plainly violative of his duties or the restrictions of Code Section 7-1-37.

§ 7-1-34

In the event there shall be a vacancy in the office caused by death, resignation, disability, disqualification, suspension, or removal of the commissioner, the senior deputy commissioner of banking and finance previously designated by the commissioner as provided in Code Section 7-1-35 shall exercise the powers and perform the duties of the commissioner until a successor is appointed and qualified to serve for the unexpired term of the commissioner.

§ 7-1-35

(a) The commissioner shall appoint from time to time, with the right to discharge at will, a senior deputy commissioner of banking and finance. The commissioner may appoint additional deputy commissioners as needed. All deputy commissioners shall also be ex officio examiners. The commissioner may appoint such additional examiners and assistants as he or she may need to discharge in a proper manner the duties imposed upon the commissioner by law, subject to any applicable state laws or rules or regulations and within the limitations of the appropriation to the department as prescribed in this chapter. Hiring, promotion, and other personnel policies of the department shall be consistent with guidelines or directives of the state, shall be in writing, and shall be made available upon request to employees of the department.

(b) Within the limitations of its annual appropriation, the department may expend funds pursuant to the authority granted under Article VIII, Section VII, Paragraph I of the 1983 Constitution of Georgia necessary to the recruitment, training, and certification of a professional staff of financial examiners. The department may provide for the participation of examiners in such educational, training, and certification programs as the commissioner deems necessary to the continued qualification and recognition of the professional status of examiners. The department may recognize independent certification of professional qualifications as supplemental to the rules and regulations of the State Personnel Board in considering the personnel actions relative to its examiners.

§ 7-1-36

(a) Before entering office, the commissioner shall take an oath before the Governor or one of the Justices of the Supreme Court to support the Constitution of the United States and the Constitution of Georgia and to execute faithfully the duties of his or her office, which oath shall be in writing and subscribed to by the commissioner and filed in the Governor's office. Before entering their respective offices, each deputy commissioner and examiner shall take an oath of office before the commissioner to support the Constitution of the United States and the Constitution of Georgia and to execute faithfully the duties of their respective offices which shall be in writing and subscribed by the deputy commissioner or examiner and filed with the department.

(b) The commissioner, each deputy commissioner, and each examiner shall:

(1) Faithfully discharge, execute, and perform all and singular the duties required of such officer and which may be required by the Constitution and laws of the State of Georgia;

(2) Faithfully account for all moneys that may be received by such officer from time to time by virtue of his office; and

(3) Safely deliver to the successor of such office all books, moneys, vouchers, accounts, and effects whatever belonging to said office.

§ 7-1-37

(a) Except as provided in subsections (c), (d), and (e) of this Code section, the commissioner, any deputy commissioner, any department employee with financial institution or licensee supervisory responsibilities, or any examiner employed by the department shall not directly or indirectly:

(1) Receive any money or property as a loan from or become indebted to any financial institution or from or to any director, officer, agent, employee, attorney, or subsidiary of a financial institution, unless such employee does not examine or exercise supervisory responsibility over any financial institution;

(2) Receive any money or property as a gift from any financial institution or from any director, officer, agent, employee, attorney, or subsidiary of a financial institution, unless consistent with the ethics in government policy of this state;

(3) Give any money or property as a gift to any financial institution or to any director, officer, agent, employee, attorney, or subsidiary of a financial institution, unless consistent with the ethics in government policy of this state;

(4) Own any share in or securities of a financial institution or otherwise have an ownership interest in a financial institution; or

(5) Engage in the business of a financial institution.

(b) For purposes of this Code section and subject to subsection (c) of this Code section, the term “financial institution” shall include a bank holding company and any subsidiary of a bank holding company.

(c) Notwithstanding the provisions of subsection (a) of this Code section, the commissioner, any deputy commissioner, any department employee with financial institution or licensee supervisory responsibilities, or examiners employed by the department may borrow money from and otherwise deal with any financial institution or subsidiary thereof existing under the laws of the United States or of any state other than this state, provided that the obligee financial institution or subsidiary is not examined or regulated by the department. For the purposes of this subsection, a financial institution shall not be considered regulated solely because it is required to file an exemption from licensing under Code Section 7-1-1001 or solely because it is owned or controlled by another bank or corporation which is or may be examined or regulated by the department.

(d) Nothing in this Code section shall prohibit the commissioner, any deputy commissioner, any department employee with financial institution or licensee supervisory responsibilities, or any examiner of the department from maintaining a deposit in any financial institution, purchasing banking services other than credit services, or owning a single share in a credit union in the ordinary course of business and under rates and terms generally available to other customers of the financial institution. The provisions of this Code section shall not be applicable in the cases of a lender credit card obligation to a financial institution where the maximum outstanding credit does not exceed $25,000.00 nor to any other credit obligation fully secured by the pledge of a deposit account in the lending institution, provided that the financial institution is not within the employee's assigned examination authority and provided that the rates and terms of all such obligations are not preferential in comparison to similar obligations of the financial institution's other customers. Such exempt obligations shall be reported to the commissioner within ten days of execution of the credit obligation if the financial institution is regulated or examined by the department, and the employee shall be disqualified from any dealings with the obligee financial institution.

(e)(1) The commissioner, a deputy commissioner, a department employee with financial institution or licensee supervisory responsibilities, or an examiner of the department may be permitted to own securities of a financial institution under any of the following circumstances:

(A) A deputy commissioner, a department employee with financial institution or licensee supervisory responsibilities, or an examiner of the department may own such a security if the security was obtained prior to commencement of employment with the department;

(B) A deputy commissioner, a department employee with financial institution or licensee supervisory responsibilities, or an examiner of the department may own such a security if the ownership of the security was acquired through inheritance; gift; stock split or dividend; merger, acquisition, or other change in corporate structure; or otherwise without specific intent on the part of the employee to acquire the interest; and

(C) The commissioner, a deputy commissioner, a department employee with financial institution or licensee supervisory responsibilities, or an examiner of the department may own such a security if the security is part of an investment fund, provided that, upon initial or subsequent investment by the employee, excluding ordinary dividend reinvestment, the fund does not have invested, or indicate in its prospectus the intent to invest, more than 30 percent of its assets in the securities of one or more Federal Deposit Insurance Corporation insured depository institutions or Federal Deposit Insurance Corporation insured depository institution holding companies and the employee neither exercises control nor has the ability to exercise control over the financial interests held in the fund.

(2) In the case of permissible acquisitions pursuant to subparagraphs (A) and (B) of paragraph (1) of this subsection, the employee shall make a full, written disclosure to the commissioner within 30 days of beginning employment or acquiring the interest. The employee is disqualified from participating in or sharing information regarding any matter or activity that concerns the financial institution. Such disqualification must not, in the judgment of the commissioner, unduly interfere with the employee's duties.

(3) In the event any covered person inadvertently and without intent on his or her part acquires an interest in a security that is not allowed by this subsection, such security shall be disposed of within 90 days of acquisition.

(f) No examiner, which for the purposes of this Code section shall include a supervisor as defined by the department, may examine a financial institution to which he or she is indebted or of which he or she owns securities under the exceptions in subparagraphs (e)(1)(A) and (e)(1)(B) of this Code section, nor may an examiner obtain credit from a financial institution if he or she has examined such financial institution in the preceding 12 months. An examiner who wishes to borrow funds from any financial institution he or she has examined in the past five years must first obtain the written permission of the commissioner. This subsection is included as an additional precaution and is not intended to preclude the operation of any other applicable law or regulation.

(g) The commissioner, any deputy commissioner, any department employee with financial institution or licensee supervisory responsibility, or any examiner shall not directly or indirectly:

(1) Receive any money or property as a loan from any department licensee or any director, officer, agent, employee, or attorney of a department licensee, unless such employee does not examine or exercise supervisory responsibility over that licensee;

(2) Receive any money or property as a gift from any department licensee or any director, officer, agent, employee, or attorney of a department licensee, unless consistent with the ethics in government policy of this state;

(3) Give any money or property as a gift to any department licensee or any director, officer, agent, employee, or attorney of a department licensee, unless consistent with the ethics in government policy of this state; or

(4) Engage in the business of a department licensee.

(h) No director, officer, agent, employee, or attorney of a financial institution, individually or in his or her official capacity, shall knowingly participate in a violation of this Code section. However, nothing in this Code section shall restrict the right of the commissioner, any deputy commissioner, any department employee with financial institution or licensee supervisory responsibilities, or any examiner to deal as any other consumer with such director, officer, agent, employee, or attorney in the ordinary course of business in consumer areas of trade or commerce not regulated by the department and under terms and conditions which are not preferential.

(i) The commissioner, any deputy commissioner, any department employee with financial institution or licensee supervisory responsibilities, or any examiner employed by the department who shall violate or participate in a violation of this Code section shall be guilty of a misdemeanor. Violation of this Code section shall be grounds for removal from office.

(j) The commissioner may adopt additional supplementary administrative policies and departmental rules governing ethical conduct and conflicts of interest on the part of employees of the department and providing certain definitions and clarifications to effectuate the purposes of this Code section.

§ 7-1-38

The commissioner shall be provided with suitable offices and equipment, the expense of which shall be paid by the state in the same manner as the expenses of other offices of the state government are paid.

§ 7-1-39

The department shall adopt an official seal. Any paper executed under the seal of the department shall prima facie be deemed to have been executed by a duly authorized official of the department.

§ 7-1-40

(a) Any authority, power, or duty vested in the commissioner or department by a provision of this chapter may be exercised, discharged, or performed by a deputy, assistant, examiner, or employee of the department acting in the commissioner's name and by his delegated authority. In the case of any matters involving the exercise of discretion, the delegation of authority shall be in writing. Any such delegation by the commissioner may be revoked in the same manner in which it was granted.

(b) The commissioner shall be responsible for the official acts of such persons who act in his name and by his authority.

§ 7-1-41

(a) The department may, by regulation, prescribe annual examination fees, license fees, registration fees, and supervision fees to be paid by the institutions and entities assigned to the department by this title for regulation, supervision, licensure, or registration. In addition, the department may, by regulation, prescribe reasonable application and related fees, special investigation fees, hearing fees, mortgage loan fees, and fees to provide copies of any book, account, report, or other paper filed in its office or for any certification thereof or for processing any papers as required by this title. Such fees may vary by type of institution regulated and nature of the work performed.

(b) The department, in its discretion, may require the payment of such fees in any manner deemed to be efficient, including collection through automated clearing-house arrangements or other electronic means, so that the state receives funds no later than the date the payment is required to be made.

§ 7-1-42

In the event any financial institution shall fail or refuse to pay on demand any amount owed to the department, including, but not limited to, outstanding fees, the department may proceed through the Attorney General to collect the same by action at law.

§ 7-1-43

Fees prescribed by this chapter shall be collected by the department and deposited with the Office of the State Treasurer. The department may, at its discretion, remit such amounts net of the cost of recovery, which cost may include fees paid to a collection agency or attorney for recovery of moneys due the department. All of the expenses incurred in connection with the conduct of the business of the department shall be paid out of the appropriations of funds to the department by the General Assembly. Such expenses shall include all expenses incurred as travel expenses by personnel of the department when away from their official station as assigned by the commissioner.

§ 7-1-60

Except where otherwise specifically provided, the department shall enforce and administer all laws of this state relating to financial institutions and shall exercise general supervision over financial institutions in accord with the underlying objectives of this chapter.

§ 7-1-61

(a) The department shall have the authority to promulgate rules and regulations to effectuate the objectives or provisions of this chapter. Without limiting the generality of the foregoing, the department is expressly authorized to make rules and regulations, consistent with this chapter, relating to organization, operations, and powers of financial institutions to:

(1) Enable financial institutions existing under the laws of this state to compete fairly with financial institutions and others providing financial services in this state existing under the laws of the United States, other states, or foreign governments; or

(2) Protect financial institutions jeopardized or challenged by new economic or technological conditions or by significant changes in the legal environment.

(b) In the exercise of the discretion permitted by this Code section, the commissioner shall consider:

(1) The ability of financial institutions to exercise any additional powers in a safe and sound manner;

(2) The authority of any federally chartered bank, as the term “bank” is defined in Code Section 7-1-621, operating pursuant to federal law, regulation, or authoritative pronouncement;

(3) The powers of other entities providing financial services in this state; and

(4) Any specific limitations on financial institution operations or powers contained in this chapter.

(c) Rules and regulations promulgated by the department may provide for controls, registration, or restrictions reasonably necessary to:

(1) Prevent unfair or deceptive business practices which are prohibited under Code Section 10-1-393;

(2) Prevent deceptive or misleading business practices by financial services providers which may occur by way of alternate delivery systems for the provision of financial products and services such as the Internet or other telecommunication capabilities; or

(3) Prevent or control unfair or deceptive business practices which would operate to the detriment of any competing business or enterprise or to persons utilizing the services of any financial institution, its subsidiary, or affiliate.

(d) All rules and regulations shall be promulgated in accordance with Chapter 13 of Title 50, the “Georgia Administrative Procedure Act,” including the requirements for hearing as stated in that chapter. Regulations issued under this or other provisions of this chapter may make appropriate distinctions between types of financial institutions and may be amended, modified, or repealed from time to time.

§ 7-1-61.1

(a) For purposes of this Code section, the term “power” means any banking or corporate power, right, benefit, privilege, or immunity of a financial institution, the deposits of which are federally insured, as set forth in any federal statute or any regulation, ruling, circular, bulletin, order, or interpretation issued by the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, National Credit Union Administration, or Federal Reserve System.

(b) To provide parity with financial institutions whose deposits are federally insured, the commissioner may, by specific order directed to a category of banks or credit unions, grant any power conferred upon a financial institution, subject to the supervision of the federal government, to:

(1) State chartered banks and credit unions to enable such banks and credit unions to compete; and

(2) Subsidiaries of state chartered banks and credit unions to the same extent powers are granted to subsidiaries of national banks or federal credit unions to enable such subsidiaries of state chartered banks and credit unions to compete.

(c) No order provided for in subsection (b) of this Code section shall be issued unless the commissioner determines that such activity will not present undue safety and soundness risks to the banks or credit unions involved. In making such determination, the commissioner shall consider the financial condition and regulatory safety and soundness ratings of the banks or credit unions affected and the ability of management to administer and supervise the activity. The department shall make any order issued pursuant to this Code section available for public review.

(d) No later than ten days after the issuance of any order by the commissioner pursuant to this Code section, the commissioner shall provide a copy of such order to the chairpersons of the House Committee on Banks and Banking and Senate Banking and Financial Institutions Committee.

§ 7-1-62

The department may promulgate regulations concerning the manner in which the books of financial institutions will be maintained in order to assist the department in its examinations and other supervisory activities, provided that, in all events:

(1) A financial institution shall enter on its books a complete and accurate account of all of its assets, whether the assets are in its name or the name of others, at values which shall not, without the prior approval of the department, exceed the actual cost of the assets to the financial institution; and

(2) A financial institution shall enter on its books a complete and accurate account of its liabilities, its borrowings, and the security interests it has granted and shall maintain additional accounts for losses and expenses.

§ 7-1-63

(a) The department shall issue regulations classifying records kept by financial institutions and prescribing the period, if any, for which records of each class shall be retained and the form in which such records shall be maintained. Such periods may be permanent or for a lesser term of years. In issuing such regulations, consideration shall be given to the objectives of this chapter and to:

(1) Evidentiary effect in actions at law and administrative proceedings in which the production of records of financial institutions might be necessary or desirable;

(2) State and federal statutes of limitation applicable to such actions or proceedings;

(3) Availability of information contained in the records of the financial institution from other sources;

(4) Requirements of electronic systems of transferring funds; and

(5) Other pertinent matters;

so that financial institutions will be required to retain records for as short a period as is commensurate with interests of customers, shareholders, and the people of this state.

(b) The regulations of the department shall not require financial institutions to maintain originals of checks or items for the payment of money or original computer tapes or original records with respect to accounts which have been inactive for a period of 12 successive months. Where a financial institution employs computers, its records may consist of legible products of computer operations.

§ 7-1-64

(a) Except as otherwise provided in subsection (b) of this Code section, the department shall examine all financial institutions at least once each year and may examine or investigate any financial institution more frequently at any time it deems such action necessary or desirable. At least once annually the examination shall consist of a comprehensive review of the accounts, records, and affairs of the institution.

(b) The department may, consistent with the objectives of this chapter and the purposes listed below, alter the examination frequency and scope as set out in subsection (a) of this Code section:

(1) To achieve cooperation and coordination with other state and federal regulatory authorities including but not limited to examination programs of banks or bank holding companies having multistate operations;

(2) To assure that appropriate time and attention are devoted to the supervision of troubled financial institutions; or

(3) To minimize the examination burden on well-managed financial institutions which have consistently been operated with safe and sound banking practices.

(c) In the case of a financial institution which is a member of the Federal Reserve System or whose deposits are insured by a public body of the United States, the department may accept, in lieu of any examination required by this Code section, examinations or reports thereof made pursuant to the Federal Reserve Act 1 or statutes of the United States authorizing such insurance.

(d) Employees of the department shall not divulge any information or provide prior notice, directly or indirectly, to any officer, director, agent, representative, or employee of a financial institution concerning the time or date of examination of the financial institution except in accordance with internal policy prescribed by the commissioner. Employees violating the policy of the commissioner relating to information or prior notice concerning examinations shall be subject to immediate dismissal.

1 12 U.S.C.A. § 221 et seq.

§ 7-1-65

When requested in writing by the board of directors or holders of a majority of the shares of a financial institution, the department, at a time fixed by it, shall examine or investigate the affairs and condition of the financial institution. However, this provision shall not be construed to mean that such institution, directors, or shareholders shall have any greater right to require the department to disclose the results of such examination or investigation than they have in case of any examination or investigation at the insistence of the department nor shall the department be required under this Code section to make more than one examination per year of any financial institution.

§ 7-1-66

(a) Examinations and investigations shall be made by the commissioner or by qualified examiners or employees empowered in writing by the department to make examinations or investigations. The department may, when the occasion requires, appoint special examiners and prescribe their duties and powers.

(b) Officials authorized to make examinations or investigations shall have the power and authority to administer oaths and to examine under oath any person (including any officer, director, agent, attorney, member, or employee of any financial institution) whose testimony may be relevant to the examination or investigation. Such officials shall have the authority and power to compel the appearance and attendance of any such person and the production by such person of pertinent books and papers, including books and papers to which the person has access because of his position with a financial institution, and for such purposes shall have the authority to issue a subpoena requiring the appearance and attendance of any such person or for the production of any pertinent books and papers.

(c) If any person shall fail or refuse to obey an order or subpoena issued by the department, a court of appropriate jurisdiction, upon application by the department, may issue an order requiring such person to appear before the court to show cause as to why he or she should not be adjudged in contempt and punished accordingly for refusal to obey the subpoena.

§ 7-1-67

(a) Any official who shall make an examination pursuant to this chapter shall reduce the result thereof to writing in such form as shall be prescribed by the department. Such report shall contain a full, true, and correct statement of the condition of the financial institution in the case of a comprehensive examination or of the matter subject to inquiry in the case of other examinations.

(b) Each report shall be the property of the regulatory agency which generates such report; provided, however, that a copy of such report may be furnished to the examined financial institution for its internal, confidential use. A financial institution or any officer, director, or employee thereof shall not disclose a report or any portion of its contents. If a subpoena or discovery request is received for a report or any portion of its contents, the financial institution must deliver a copy of such subpoena or discovery request to the department immediately.

§ 7-1-68

(a) The department may require reports on the condition of or any particular facts concerning any financial institution at any time the department deems it necessary or advisable.

(b) The form of all reports, the information to be contained in them, and the date on which they shall be due shall be prescribed by the department. The reports shall be verified by the oath or affirmation of the president, secretary, or other managing officer of the institution.

(c) Any financial institution which fails to prepare any report in accordance with this Code section, or fails to provide any facts or information requested under subsection (a) of this Code section, shall pay the department a penalty of $100.00 for each day after the time fixed by the department for filing such report, but the department may, in its discretion, relieve any financial institution from the payment of such penalty, in whole or in part, if good cause be shown. If a financial institution fails to pay a penalty from which it has not been relieved, the department may, through the Attorney General, maintain an action at law to recover it.

§ 7-1-69

The reports of examinations and investigations made by the department and reports made by financial institutions shall be preserved by the department for a period of five years, after which they may be destroyed.

§ 7-1-70

(a) Records of the department, regardless of the medium by which stored, are confidential. Except as otherwise provided in this Code section, this chapter, or departmental rule or regulation, and, notwithstanding the provisions of Article 4 of Chapter 18 of Title 50, such records shall not be open to inspection by or made available to the public. The commissioner and all other officials and employees of the department shall not disclose facts and information obtained in the course of their duties, including information obtained from examinations, investigations, and reports as required or authorized in this part. The department may, however, provide by rule, regulation, or order for public access to certain records which, in the opinion of the commissioner, do not contain sensitive information and from which disclosure the public would benefit.

(b) Subject to the exceptions, safeguards, and limitations contained in subsection (c) of this Code section, the restrictions of subsection (a) of this Code section shall not apply to disclosures:

(1) Within the department or made to the Governor in the course of official duties;

(2) Required by law, including disclosures required by subpoena or other legal process of a court or administrative agency having competent jurisdiction in legal proceedings and, where applicable, when the financial institution is a party or where the information is not otherwise available upon direct subpoena of a financial institution;

(3) In prosecutions or other court actions to which the department or the commissioner is a party;

(4) Made to federal or state financial institution supervisory agencies, other federal or state regulatory agencies with legal authority over such institution, the United States Department of Justice (including the Federal Bureau of Investigation), the United States Department of the Treasury, the Georgia Bureau of Investigation, or state or local law enforcement authorities;

(5) Made to any officer, attorney, or director of the involved financial institution, made to any officer, attorney, or director of the involved financial institution's holding company, or with the written consent of said financial institution or holding company;

(6) Made in a publication of the department which is available to the general public;

(7) Of general economic and similar data considered by the department in regard to requests for new articles, new branches, changes in the location of facilities, or similar matters made to parties interested in the department's action in regard thereto; and

(8) Made to a financial institution concerning the past job performance of a prospective employee with the written consent of such prospective employee, provided such written consent shall not be required in circumstances provided for in Code Section 7-1-840.

(1) Disclosures made under subsection (b) of this Code section shall be made, where appropriate, under safeguards designed to prevent further dissemination of confidential data; provided, however, that for disclosures of suspected criminal activity made under paragraph (4) of subsection (b) of this Code section, the confidentiality safeguards already in place within those agencies shall be considered adequate. Except for disclosures under paragraph (2) of subsection (b) of this Code section, the department shall not be required to make authorized disclosures where it deems such disclosures undesirable;

(2) All disclosures shall be limited to only those documents directly relevant to the inquiry or legal dispute at issue; and

(3) The documents listed below shall be considered absolutely privileged and confidential and shall be exempt from open inspection and not subject to disclosure by the department without a specific order of court pursuant to Code Section 7-1-90, which order specifically holds the public interest in the safety and soundness of the banking system and its regulation to be outweighed by other interests of justice. Such exempt documents shall include:

(A) Departmental internal investigations, documents, and notes which reflect the deliberative processes of employees;

(B) Opinions provided in confidence to the department regarding proposed new banks;

(D) Advisory opinions;

(E) Recommendations, summaries, and analyses that are utilized for departmental internal purposes and are not final orders or reports; and

(F) Other similar materials or notes.

(d) Notwithstanding any other provision of this Code section, the commissioner may, without waiving any privilege, authorize access to confidential supervisory information for any appropriate governmental, law enforcement, or other public purpose.

(e) Violation of this Code section shall be grounds for removal from office.

§ 7-1-71

(a) The department, by order of the commissioner, shall have the right to require the immediate suspension from office of any director, officer, or employee of any financial institution and to prohibit any such person's participation in the affairs of any financial institution if the department finds such person:

(1) To be dishonest, incompetent, or reckless in the management of the affairs of the financial institution;

(2) To have persistently violated the laws of this state;

(3) To have violated the lawful orders, regulations, or conditions of a written agreement of or with the department;

(4) To have been indicted for any crime involving moral turpitude or breach of trust;

(5) To have evidenced an inability to conduct his or her own financial affairs or the affairs of a company in which such individual owns a majority interest or has responsibility for financial matters, in a fiscally responsible, diligent, or lawful fashion; or

(6) To have engaged in any unsafe or unsound practice in connection with any insured depository institution or to have demonstrated willful or continuing disregard for the safety and soundness of a financial institution.

(b) A prohibition order, which prohibits an individual from participating in any capacity in the affairs of a financial institution, may be issued by the commissioner in connection with a suspension order issued under the authority of this Code section. Such prohibition order may provide that if an officer, director, or employee has been removed from office temporarily or permanently at a financial institution, he or she may also be prohibited from participating in any manner in the conduct of the affairs of any financial institution or any financial institution's affiliate regulated by the department during the time the prohibition order is in effect.

(c) The department shall serve written notice upon the party of its determination to suspend such person from office or prohibit such person from participating in the affairs of a financial institution pursuant to subsections (a) and (b) of this Code section. A suspension order or a prohibition order shall be effective upon such service and shall specify whether the suspension is temporary, the duration and terms of the suspension if temporary, or if it is permanent. The prohibition order shall be consistent in duration with the suspension order.

(d) Any person suspended or prohibited under this Code section may request his or her reinstatement in writing delivered to the department within ten days of his or her suspension or prohibition. If such reinstatement is not requested, the director, officer, or employee shall be considered permanently removed and, if so ordered, permanently prohibited from participation in the affairs of any financial institution.

(e) Upon request for reinstatement, the department shall conduct an internal review of the matter during which such person has the opportunity to state his or her case to the commissioner. The department shall deliver the findings of the hearing to such person. If the person requests further review, the department may refer the matter to the Office of State Administrative Hearings under Chapter 13 of Title 50, the “Georgia Administrative Procedure Act,” where a nonpublic hearing shall be held to review the department's decision. The final decision of the department shall be conclusive, except as it may be subject to judicial review under Code Section 7-1-90.

(f) Any order issued pursuant to this Code section shall also be delivered to the financial institution with which the party was associated at the time such order was issued.

§ 7-1-72

(a) Notwithstanding any other provisions of law to the contrary and consistent with the objectives of this chapter as set forth in Code Section 7-1-3 and subject to the procedures provided in regulations of the department, a financial institution may provide financial services to its customers either directly or through employment of duly licensed persons, provided that such financial institution or its licensed employee or agent has qualified under other laws otherwise applicable to other providers of such financial services.

(b) Where financial services are being performed by a person or corporation for a financial institution, such person or corporation shall be subject to:

(1) Examination and investigation by the department to the same extent as if the services were performed by the financial institution on its own premises;

(2) Regulation by the department in regard to such services to the same extent as if such services were being performed by the financial institution for its own internal benefit or as an extension of the range of financial services products offered to customers of the financial institution; and

(3) All enforcement proceedings made available to the department in this title.

(c) In the event of conflicting statutory responsibilities, except as otherwise provided by law, the department shall not grant licenses to providers of financial services to or through financial institutions. The department shall be the responsible authority in reviewing, authorizing, or otherwise regulating, consistent with this chapter, the contractual relationship entered into by financial institutions for the provision of such services or incidental to application for further licensing.

(d) For purposes of this Code section, “financial services” shall include, but is not limited to, business and consumer financial record keeping, investments, planning and advisory assistance, surety, brokerage, data processing, electronic fund transfers, information services, and protective services performed for a financial institution which are normally performed by the financial institution for its own benefit or provided to the customers of the financial institution incidental to its conduct of the banking business. The department may further define “financial services” to include other activities of a financial nature which it determines to be consistent with the safe and sound operation of a banking business, not otherwise in violation of this chapter, and in the public interest.

(e) The department may, by regulation, prescribe fees to be paid for examinations of a person or corporation that performs financial services for a financial institution.

(f) Notwithstanding Code Section 7-1-70, the department may furnish a copy of any report of a financial service provider prepared by the department to the financial institution serviced by the financial service provider.

§ 7-1-73

The department may examine or investigate any affiliate of a financial institution for the purpose of determining the condition of the financial institution to the same extent and in the same manner as it may examine or investigate the financial institution itself.

§ 7-1-74

For each calendar year the department shall compile and publish in print or electronically an annual report in such form and containing such information as it may determine necessary to summarize reasonably its operations. The report may contain recommendations which the department may have for changes in the laws governing financial institutions.

§ 7-1-75

Whenever in this chapter the department is authorized but not required to take any action, the taking of such action shall be within the discretion of the commissioner or his duly authorized deputy. The department shall not be required to grant opportunity for hearing except where such hearing is specifically required by this chapter or Chapter 13 of Title 50, the “Georgia Administrative Procedure Act.” The department shall maintain accurate memoranda or transcripts of all hearings conducted by the department pursuant to this Code section.

§ 7-1-76

(a) Failure of the department to act within any of the time limits established by this chapter or regulations issued pursuant thereto shall not deprive the department of jurisdiction thereafter to act in regard to the matter involved without need for resubmittal of any application, request, or similar action.

(b) Any action, application, or request requiring department approval under this chapter may be withdrawn by the applicant prior to department action thereon without prejudice to the applicant's right to resubmit such application at a later date. If such application has been forwarded to the department through the Secretary of State, the department shall notify the Secretary of State of any such withdrawal and that the application or request is no longer pending.

(c) The department may impose conditions on any approval, including but not limited to conditions designed to address competitive, financial, managerial, safety and soundness, convenience and needs, compliance, and other concerns, to ensure that such approval is consistent with the provisions of this chapter.

(d) The department may nullify a decision on any request, action, or application if:

(1) The department becomes aware of any material misrepresentation or omission by the applicant;

(2) The department is not promptly informed by the applicant of a subsequent material change in circumstances;

(3) The decision is contrary to law, regulation, or departmental policy; or

(4) The decision was granted due to clerical or administrative error or was based on a material mistake of law or fact.

§ 7-1-77

Any rule, regulation, order, or administrative directive issued by a state official, agency, or entity which is intended to be applicable to banks, banking associations, bank holding companies, savings and loan associations, credit unions, or companies engaged in selling money orders or any other company or financial institution under the supervision of the commissioner and required to report to the commissioner or subject to rules and regulations issued by the commissioner shall be effective as to any such company or financial institution only after the rule, regulation, order, or other directive has been approved in writing by the commissioner. Nothing in this Code section shall be construed to modify, limit, or otherwise restrict the authority of the department to conduct an examination, bring a civil or administrative action, or otherwise enforce state or federal laws against a financial institution.

§ 7-1-78

(a) The department may, at its discretion, enter into cooperative or reciprocal agreements with other supervisory or regulatory authorities or law enforcement and may furnish to such entities information contained in the examinations, reports, and institution files, provided that the information is to be used for confidential, regulatory purposes.

(b) Furnishing information as permitted by this Code section shall not be deemed to change the confidential character of the information furnished.

(c) The department may accept reports of examination and other records from such entities in lieu of conducting its own examination.

(d) Any examination reports, reports of investigation, or other information obtained from such entities shall be deemed the property of the providing entity and not available for public review. Any requests for such information shall be made to the providing entity.

(e) The department may take such actions as are reasonably necessary, either independently or with such entities, to facilitate the regulation of financial services providers doing business in this state.

§ 7-1-79

(a) The department may determine that formal approvals for certain transactions or activities to be conducted by its regulated entities are not necessary but may be replaced by a discretionary expedited approval process to begin with written notice to the department by the entity which describes the transaction or activity in a form and with a specificity acceptable to the department. For such instances, the department shall promulgate rules and regulations consistent with the authority provided to it in this chapter.

(b) In the exercise of the discretion permitted by this Code section, the commissioner shall consider:

(1) Whether the transaction or activity poses unacceptable safety and soundness risks;

(2) Whether the transaction or activity is warranted only for financially strong and well-managed institutions, as such institutions are further defined in department regulations;

(3) Whether the transaction or activity is necessary to reduce the burden on financial institutions or other entities which the department regulates;

(4) Whether the transaction or activity will assist regulated entities in remaining competitive and responsive to both economic and consumer demands; and

(5) Whether the transaction or activity is consistent with the objectives of this Code section.

§ 7-1-90

(a) Any final action of the department or refusal of the department to act may be subject to judicial review by any person or corporation affected by such action. Such action shall be brought within 60 days of the final action or refusal of action by the department as a special statutory proceeding in the county in which the affected person or corporation resides or is domiciled if within this state (which in the case of a corporation shall be the county of its registered office if it has such an office) or in Fulton County if the affected person or corporation resides or is domiciled outside of this state. The review shall be conducted by the court without a jury. The court shall not substitute its judgment for that of the department but may:

(1) Compel department action unlawfully withheld; or

(2) Hold unlawful and set aside department action found to be:

(A) In violation of constitutional or statutory provision;

(B) In excess of statutory authority;

(D) Arbitrary, capricious, or otherwise in abuse of discretion,

provided that any action reviewable under Chapter 13 of Title 50, the “Georgia Administrative Procedure Act,” or through the injunction procedure of Code Section 7-1-155 shall be reviewed under that chapter or Code section and not under this Code section.

(b) Appeals from all final orders and judgments entered by the superior court under this Code section may be taken to the Court of Appeals or the Supreme Court in the same manner as in other cases.

§ 7-1-91

(a) Whenever it shall appear to the department that the capital stock of a financial institution has been reduced below the minimum required by law or below the amount required by its articles, the department may issue a written order directing such corporation to restore the deficiency within such period as shall be specified in the order.

(b) Whenever it shall appear to the department that any financial institution is not keeping its books and accounts in such manner as to enable the department, with reasonable facility, to ascertain the true condition of the financial institution, the department may issue a written order requiring such financial institution, within such period as shall be specified in the order, to open and keep such books as the department may, in its discretion, reasonably determine are essential for the purpose of keeping accurate and convenient records of the transactions and accounts of such financial institution.

(c) Whenever any financial institution shall refuse to submit its records and affairs to a legally conducted examination or investigation by the department, the department may issue a written order requiring such financial institution to permit the commissioner or other duly authorized examiner to make such examination or investigation, within such period as shall be specified in the order.

(d) Whenever it shall appear to the department that any financial institution has violated its articles or any law of this state or any order or regulation of the department or that any financial institution is conducting business in an unsafe or unauthorized manner, the department may issue a written order requiring the financial institution to cease and desist from such unsafe and unauthorized practices.

(e) Whenever a financial institution shall fail to comply with the terms of an order of the department which has been properly issued under the circumstances, the department, upon notice of three days to the financial institution, may, through the Attorney General, petition the principal court for an order directing the financial institution to obey the order of the department within such period as shall be fixed by the court. Upon the filing of such petition, the court shall allow a rule to show cause why it should not be granted. Whenever, after a hearing upon the merits or after failure of the financial institution to appear when ordered, it shall appear that the order of the department was properly issued, the court shall grant the petition of the department.

(f) Any financial institution which violates the terms of any order issued pursuant to this Code section shall be liable for a civil penalty not to exceed $1,000.00. Each day during which the violation continues shall constitute a separate offense. In determining the amount of penalty, the department shall take into account the appropriateness of the penalty relative to the size of the financial resources of the institution, the good faith efforts of the financial institution to comply with the order, the gravity of the violation, the history of previous violations by the financial institution, and such other factors or circumstances as shall have contributed to the violation. The department may at its discretion compromise, modify, or refund any penalty which is subject to imposition or has been imposed pursuant to this Code section. The financial institution or other person assessed as provided in this subsection shall have the right to request a hearing into the matter within ten days after notification of the assessment has been served upon the financial institution involved; otherwise, such penalty shall be final except as to judicial review as provided in Code Section 7-1-90.

(g) All penalties recovered by the department pursuant to this Code section shall be paid into the state treasury to the credit of the general fund; provided, however, that the department at its discretion may remit such amounts recovered, net of the cost of recovery, in the same manner as prescribed for judgments received through derivative actions pursuant to the provisions of Code Section 7-1-441.

(h) The term “financial institution” as used in this Code section shall include a bank holding company as defined in Code Section 7-1-605 and those entities required to be licensed pursuant to Article 4A of this chapter and any officer, director, employee, agent, or other person participating in the conduct of the affairs of the financial institution subject to the orders issued pursuant to this Code section.

§ 7-1-92

(a) Articles of financial institutions existing under the laws of this state are subject to forfeiture:

(1) In the case of an institution subject to such requirements, for failure to file its annual report with the Secretary of State or its annual license or occupation tax return within the time required by law;

(2) For failure to maintain a registered office in this state as required by the provisions of Title 14, relating to corporations, or by Code Section 7-1-132;

(3) For having procured its articles through fraud;

(4) For failure to organize and proceed to do business within a period of 24 months from the date of the certificate of incorporation;

(5) For failure to obey a final court order issued pursuant to subsection (a) of Code Section 7-1-91 within the time specified in such order; or

(6) Where, because of violation of law or its articles or the unsafe condition or manner of operation of the financial institution, its continued existence is likely to injure the public or the institution's creditors or depositors.

(b) Where such grounds exist, the department, through the Attorney General and in the name of the state, is authorized to institute quo warranto or other appropriate proceedings in the principal court to vacate and forfeit the articles of any financial institution.

(c) Where the articles of any financial institution shall be forfeited, the department shall, if it has not already done so, take charge of the business and assets of such institution and proceed to liquidate it in the same manner as is herein provided in cases where the department takes possession of a financial institution directly.

(d) No action to forfeit the articles of any financial institution shall be brought except as provided herein, but any person or corporation shall have the right to submit to the department any facts which under the law would authorize the forfeiture of the articles of a financial institution.

(e) On and after April 1, 1975, the provisions of Title 14, relating to forfeiture, shall not be applicable to financial institutions.

§ 7-1-93

The department may bring an appropriate civil action to enforce any provision of this chapter or regulations issued hereunder, whether by injunction or otherwise, in the superior court of this state having jurisdiction over one or more of the defendants.

§ 7-1-94

When the record of any examination or investigation of a financial institution by the department or the report by the examiner or employee of the department who conducted such examination or investigation is admissible in evidence under Title 24, the department, with the permission of the court, may edit out of the record or report any portion thereof which is not pertinent to the issue in question before the court or which would tend unnecessarily to affect adversely the public confidence in the financial institution.

§ 7-1-98

It shall be the duty of the Department of Law to advise the department on any question of law submitted by it.

§ 7-1-99

(a) Except as provided in Chapter 3 of this title, as amended, and Chapter 22 of Title 33, as amended, the department is designated as the appropriate agency of this state to receive and investigate complaints or allegations regarding violations of the interest and usury laws of this state. In processing such matters, the department may refer complaints or allegations to other state or federal officials or agencies which have jurisdiction over the lender involved for investigation or other action.

(b)(1) The department, in consultation with the Department of Law, may render and publish advisory opinions for the assistance and guidance of financial institutions as defined in this chapter.

(2) Reliance in good faith upon an opinion issued as provided in paragraph (1) of this subsection shall constitute prima-facie evidence of good faith on the part of any person charged with any violation, resulting from the reliance, which subjects him to forfeiture or other sanctions imposed by the interest and usury laws. The provisions of this paragraph shall apply even if, following the reliance, the opinion is amended, rescinded, or determined by any judicial or other authority to be invalid.

§ 7-1-110

Any financial institution may remain closed one day each week in addition to Sundays and other legal holidays; and any act authorized, required, or permitted to be performed at or by any such financial institution on a day when it is closed may be performed on the next succeeding business day; and no liability or loss of rights of any kind shall result from the delay. Saturday shall not be construed to be a business day and any business conducted on Saturday may be deferred to the next succeeding business day, provided that such deferral is applicable to all business conducted by said financial institution on that day and is in accordance with a resolution adopted by the board of directors of the institution. Customers of any financial institution adopting such a deferral policy shall be notified of any such deferral of business by prominent notice posted in the lobby of the financial institution and by circularization in regular statement mailings at least 30 days prior to the effective date of any such deferral policy. Any financial institution changing its permissive closing day, temporarily or otherwise, shall post a notice of the change and the effective date thereof in a conspicuous place at each location affected by the change at least 30 days preceding the date of the change. Notwithstanding the foregoing, credit unions serving a limited membership base may establish uniform business hours and days consistent with the needs of their membership.

§ 7-1-110.1

Except in the case of an emergency closing, before a financial institution may close a banking location, it must post at such location in a conspicuous place at least 30 days in advance of such closing a notice of intent to close. Such notice must remain posted for at least 30 consecutive days. Customers of a banking location shall be considered to have received notice if the requirements of this Code section have been met.

§ 7-1-111

Whenever it appears to the Governor that the welfare of this state or any region thereof or the welfare and security of any financial institution or the lives of the employees of the financial institution or the safety of the funds of depositors and property of the shareholders are endangered or placed in jeopardy by any impending or existing emergency or other catastrophe, including, but not limited to, economic crises, hurricanes, tornadoes, fire hazards, disruption or failure of utility, transportation, communication, or information systems, or civil disorders, the Governor may proclaim that an emergency exists and such state of emergency proclamation shall authorize financial institutions to elect to close. The Governor may also proclaim that any financial institution or type of financial institution shall be subject to special regulation as herein provided until the Governor, by a like proclamation, declares the period of such emergency to have terminated. The department may declare emergencies in specific cases for cause shown, and its declaration shall remain in effect until terminated by the Governor or the commissioner, whichever occurs first.

§ 7-1-112

(a) During the period of or as a result of any financial emergency proclaimed by the Governor or declared by the department, or during any impending or existing emergency situation as described in Code Section 7-1-111, the department, in addition to all of the powers conferred upon it by law, shall have the authority to order any one or more financial institutions to restrict all or any part of their business and to limit or postpone for any length of time the payment of any amount or proportion of the deposits in any of the departments of the financial institutions as it may deem necessary or expedient. The department may further regulate the payments of such financial institutions as to time and amount, as in its opinion the interest of the public or of such financial institutions or the depositors thereof may require.

(b) No liability or loss of any rights of any kind shall be incurred by any financial institution during any emergency period declared by the Governor or the department by reason of the delay in the payment of any item or by the return or transmission of any item or document if such delay is caused by orders of the Governor or the department, interruption of communication facilities, suspension of payments by another financial institution, war or emergency conditions, or other circumstances beyond the control of the financial institution if it exercises such diligence as the circumstances require.

§ 7-1-113

(a) A financial institution which has not transacted any business as a financial institution other than organizational business may propose to dissolve by the affirmative vote of shareholders entitled to cast at least two-thirds of the votes which all shareholders are entitled to cast on the plan and by delivering to the department articles of dissolution which shall be executed by two duly authorized officers or shareholders under the seal of the financial institution and which shall contain:

(1) The date of incorporation of the financial institution;

(2) A statement that it has not transacted any business as a financial institution other than organizational business;

(3) A statement that all liabilities of the financial institution have been paid or provided for;

(4) A statement that all amounts received on account of capital stock and paid-in capital, less amounts disbursed for expenses, have been returned to the persons entitled thereto; and

(5) The number of shares entitled to vote on the dissolution and the number of shares voted for and against it, respectively.

(b) The articles of dissolution shall be delivered to the department together with the filing fee required by Code Section 7-1-862. If the department is satisfied that the financial institution has not conducted any business other than organizational business and if it finds that the articles of dissolution satisfy the requirements of this chapter, it shall deliver them with its written approval to the Secretary of State and notify the financial institution of its action. If the department shall disapprove the articles of dissolution, it shall give written notice to the financial institution of its disapproval and a general statement of the reasons for its decision. The decision of the department shall be conclusive, except as it may be subject to judicial review under Code Section 7-1-90.

(c) If the department determines that a financial institution has not conducted any business other than organizational business and if articles of dissolution satisfying the requirements of this chapter are not delivered to the department together with the filing fee as required by Code Section 7-1-862, the department may make written demand upon the financial institution to immediately provide articles of dissolution or to provide cause why such dissolution should not be pursued directly by the department. If the financial institution fails to provide articles of dissolution as required within 60 days from the date of demand by the department, the department may seek dissolution of the financial institution in organization directly from the Secretary of State's office.

§ 7-1-114

(a) A financial institution which has commenced business may elect to dissolve voluntarily upon:

(1) Adoption by the vote required of its shareholders under subsection (b) of this Code section of:

(A) A plan of dissolution involving both a provision for assumption of its liabilities by another financial institution and a provision for continuance of its business if such assumption of its liabilities is not effected; or

(B) Any other plan of dissolution providing for full payment of its liabilities; and

(2) Approval by the department of the plan of dissolution after application for approval thereof in a manner prescribed by the department.

(b) Adoption of the plan by the shareholders of the financial institution shall require the affirmative vote of the shareholders entitled to cast at least two-thirds of the votes which all shareholders are entitled to cast on the plan and, if any class of shareholders is entitled to vote on the plan as a class, of the holders of at least two-thirds of the outstanding shares of such class, provided that, in the case of a credit union, adoption of the plan may be made by the affirmative vote of at least two-thirds of the members present and entitled to vote at a meeting duly called for that purpose.

(c) Upon receipt of an application for approval of a plan of dissolution, the department shall conduct such investigation as it may deem necessary to determine whether:

(1) The plan satisfies the requirements of this chapter;

(2) The plan adequately protects the interests of depositors, other creditors, and shareholders; and

(3) If the plan involves an assumption of liabilities by another financial institution, such assumption would be consistent with adequate and sound banking and in the public interest on the basis of factors substantially similar to those set forth in Code Section 7-1-534.

(d) Within 90 days after receipt of the application, the department shall approve or disapprove the application on the basis of its investigation and shall immediately give to the financial institution written notice of its decision and, in the event of disapproval, a general statement of the reasons for its decision. The decision of the department shall be conclusive, except as it may be subject to judicial review under Code Section 7-1-90.

§ 7-1-115

(a) The board of directors shall have full power to wind up and settle the affairs of a financial institution in voluntary dissolution proceedings.

(b) Within 30 days after the department's approval of voluntary liquidation and dissolution, the financial institution shall give notice of its dissolution:

(1) By mail to each depositor and creditor (except those as to whom the liability of the financial institution has been assumed by another financial institution pursuant to the plan), including a statement of the amount shown by the books of the financial institution to be due to such depositor or creditor and a demand that any claim for a greater amount be filed with the financial institution before a specified date at least 60 days after the date of notice;

(2) By mail to each lessee of a safe-deposit box and each customer for whom property is held in safe deposit (except those as to whom the liability of the financial institution has been assumed by another financial institution pursuant to the plan), including a demand that all property held in a safe-deposit box or held in safe deposit by the financial institution be withdrawn by the person entitled thereto before a specified date at least 60 days after the date of the notice;

(3) By mail to each person interested in funds held in a fiduciary account or other representative capacity;

(4) By a conspicuous posting at each office of the financial institution; and

(5) By such publication as the department may prescribe.

(c) As soon as feasible after the department's approval of voluntary liquidation and dissolution, the financial institution shall resign all of its fiduciary appointments and take such action as may be necessary to settle its fiduciary accounts.

(d) Except where liabilities are to be assumed by another financial institution:

(1) All claims of depositors and creditors shall be paid promptly after the date specified in the notice given under paragraph (1) of subsection (b) of this Code section, and unearned portions of rentals for safe-deposit boxes shall be rebated to the lessee thereof;

(2) Safe-deposit boxes whose contents have not been removed after the date specified in the notice given under paragraph (2) of subsection (b) of this Code section shall be opened under the supervision of the department and the contents placed in sealed packages which, together with unclaimed property held by the financial institution in safe deposit, shall be transmitted to the department to be held by it subject to Article 5 of Chapter 12 of Title 44, provided that the department while holding such property may take such actions as it deems appropriate to protect the interests of the owner, including reducing such property to cash;

(3) After payment of amounts due to all known depositors and creditors, unclaimed amounts due to depositors and creditors shall be paid through the department and held by it subject to Article 5 of Chapter 12 of Title 44; and

(4) Assets remaining after the performance of all obligations of the financial institution under this subsection and subsection (c) of this Code section shall be distributed to its shareholders according to their respective rights and preferences. Partial distributions to shareholders may be made prior to such time only if and to the extent approved by the department.

(e) During the course of dissolution proceedings, the financial institution shall make such reports as the department may require and shall continue to be subject to the provisions of this chapter concerning examinations and investigations of financial institutions. Furthermore, during the course of a voluntary dissolution, the financial institution with the written permission of the department may elect to use provisions of Article 14 of Chapter 2 of Title 14 that are not in conflict with this chapter.

(f) If, at any time during the course of dissolution proceedings, the department finds that the assets of the financial institution will not be sufficient to discharge its obligations, the department may then or at any time thereafter take possession of the business and property of the financial institution and complete the dissolution in accordance with this chapter.

§ 7-1-116

(a) When all the liabilities of the financial institution have been discharged and all of its remaining assets have been distributed to its shareholders pursuant to Code Section 7-1-115 or its liabilities have been assumed by another financial institution, the articles of dissolution shall be signed by two duly authorized officers of the financial institution under its seal and shall contain:

(1) The name of the financial institution and the post office address of its principal place of business;

(2) A statement that the department has previously approved a plan to dissolve the institution and the date on which such approval was transmitted to the Secretary of State;

(3) A statement that all liabilities of the financial institution have been discharged and that the remaining assets of the financial institution have been distributed to its shareholders or that its liabilities have been assumed as provided in this chapter; and

(4) A statement that there are no actions pending against the financial institution.

(b) The articles of dissolution shall be delivered to the department together with the filing fee required by Code Section 7-1-862. If the department finds that the articles satisfy the requirements of this chapter, it shall deliver its written approval to the Secretary of State with a copy of the articles of dissolution attached.

(c) Where a financial institution fails to file articles of dissolution within 180 days after the department determines that dissolution proceedings have been completed as provided in this part, the department may cause notice to be published in accordance with this chapter to the effect that persons having claims against the financial institution should notify the department within 30 days of the date of initial publication. If the department receives no such notifications or if claims are otherwise satisfied, the department shall notify the Secretary of State that the articles of incorporation or charter are no longer valid and should be promptly canceled of record in the offices of the Secretary of State.

§ 7-1-117

If all applicable fees, charges, and taxes required by law have been paid upon the receipt of the department's approval, under Code Section 7-1-113 or 7-1-116, of the articles of dissolution, the Secretary of State shall immediately issue to the financial institution a certificate of dissolution with the approved articles of dissolution attached thereto and shall retain a copy of such certificate, the approval of the department, and the articles; and the existence of the financial institution shall cease.

§ 7-1-130

(a) The name of a financial institution shall not contain the words “Government,” “Official,” “Federal,” “National,” or “United States” or any abbreviation of any such words and shall not in the opinion of the department:

(1) Be indistinguishable from the corporate name of another financial institution conducting a banking business in this state as reflected in the records of the department; or

(2) Contain any word which may lead to the conclusion that the financial institution is authorized to perform any act or conduct any business which it is unauthorized or forbidden to perform by law, its articles, or otherwise.

(b) A financial institution may, without regard to subsection (a) of this Code section, use:

(1) Its name in use on April 1, 1975;

(2) A name in use on April 1, 1975, by another financial institution which is adopted by:

(A) A financial institution which is the resulting institution in a plan of merger or consolidation to which the institution using the name is a party; or

(B) A financial institution which is incorporated under this chapter in pursuance of a plan of segregating the banking business and the trust business of the institution using the name; or

(3) A name of another financial institution already transacting business with the consent of the latter institution, provided that the names are distinguishable in the records of the Secretary of State.

§ 7-1-131

(a) The exclusive right to use a corporate name permitted to be used by a financial institution may be reserved by a person intending to incorporate such an institution, by a corporation intending to engage in business in this state as a financial institution, by a financial institution intending to change its name, or by a national bank, a federal credit union, or a savings and loan association intending to convert into a financial institution organized under the laws of this state.

(b) Such reservation may be made by filing with the department a letter form application to reserve a specified name. If the department concludes that the use of the name complies with the requirements of Code Section 7-1-130, is otherwise consistent with the purposes and provisions of this chapter, and is distinguishable upon the records of the Secretary of State from the name of any other corporation, limited partnership, or limited liability company, it shall approve the name and notify the Secretary of State to issue such name reservation.

(c) The right to the exclusive use of a name reserved pursuant to this Code section may be transferred to anyone who would be entitled to reserve such name under this Code section except for such prior reservation by filing with the department a notice of the transfer which shall be executed by the transferor who reserved the name and which shall set forth the name and address of the transferee. The department shall send a copy of such notice to the Secretary of State.

(d) Notwithstanding any other provisions of law, the process set forth in this Code section shall be the exclusive process for reserving the corporate name of a financial institution. Such reservation shall be valid for a period of six months.

§ 7-1-132

(a) Every financial institution shall continuously maintain a registered agent and a registered office. Such agent and office shall be located in a county in this state where the financial institution is authorized to conduct its general business; and, in the case of financial institutions subject to Chapter 2 or 3 of Title 14, such agent and office shall be the same as is required under those chapters.

(b) Not later than September 30, 1998, every financial institution shall file with the department a statement designating the name of its registered agent and the place of its registered office by street, post office address, and county. In the event of the failure of an institution to file said statement, the registered agent shall be the chief executive officer of the bank and the registered office of the institution shall be the business address where the chief executive officer is located.

(c) A financial institution may change, and a new financial institution may establish, its registered agent and the location of its registered office by filing a statement with the department designating the name of the new registered agent or the street, post office address, and county of its new registered office or both, provided that no change in the registered agent or office shall affect actions or proceedings commenced before the time of said change.

(d) Nothing contained in this Code section shall affect the obligation of a financial institution to file information with the Secretary of State.

§ 7-1-133

(a) No person or corporation doing business in this state shall advertise in or through any newspaper, radio, television, letters, circulars, billheads, or in any way or through any medium seeking to induce any person to purchase an instrument which is purported to be insured or guaranteed in a manner comparable to an insured deposit or share account in any financial institution authorized to have such deposits or accounts when in fact such instrument does not possess comparable insurance coverage as determined by the department. Whenever any person, firm, or corporation doing business in this state shall compare, in any such advertising media, an investment or a return on an investment, except an investment or return on an investment in the form of a deposit or share account, to a deposit or share account or a return on a deposit or share account in an authorized financial institution, it shall be clearly stated in such advertising or solicitation that the investment is not a deposit insured by a public body of the United States or of this state.

(b) No person or corporation shall use the terms “savings,” “savings account,” “deposit,” or “withdrawal” or any equivalent thereof in any advertisement as above described in subsection (a) of this Code section indicating reference to instruments issued by or to be issued by the person or corporation.

§ 7-1-134

Nothing in this chapter shall abrogate or limit the law as to unfair competition or unfair trade practice nor derogate from the common law or principles of equity or the statutes of this state or of the United States with respect to the right to acquire and protect trade names and trademarks.

§ 7-1-150

(a) The department may in its discretion take possession of the business and property of any financial institution whenever such financial institution:

(1) Is insolvent or in an unsafe or unsound condition to transact its business;

(2) Has generally suspended payment of its obligations, without authority of law;

(3) Has violated any court order, statute, rule, or regulation, or its articles and the department determines that its continued control of its own affairs threatens injury to the public, the financial community, or its depositors and other creditors; or

(4) Requests the department, by its board of directors, to take possession for the benefit of depositors, other creditors, and shareholders.

(b) The right of the department to take possession of a financial institution shall be in addition to and cumulative with all other rights, remedies, and powers of the department. The department may, in its discretion before or after taking possession, petition the principal court for appointment of a receiver pursuant to subsection (c) of Code Section 7-1-151.

§ 7-1-151

(a) Upon taking possession of a financial institution, the department shall automatically become the receiver of said institution with all rights, powers, and duties conferred by this chapter and, to the extent not in conflict with this chapter, all rights, powers, and duties of a receiver appointed pursuant to Chapters 5 and 8 of Title 9, relating to injunctions and receivers.

(b) Except as provided in subsection (c) of this Code section, no court shall appoint anyone but the department as receiver of a financial institution. Whenever any court, at the instance of the department, a depositor, a shareholder, or other person entitled by law to institute such proceedings, shall determine that a receiver should be appointed, for any reason whatsoever, it shall appoint the department as such receiver. When thus appointed receiver by a court, the department shall serve in the same manner and with the same limitations and shall have the same rights, powers, and duties as when it becomes receiver by operation of law and without appointment by any court. No court shall impose upon the department as receiver any duties or restrictions in conflict with this chapter.

(c) In any proceeding for the appointment of a receiver of an institution whose deposits or shares are insured by a public body of the United States, the court may upon the recommendation of the department (whether or not the department is a party) appoint said public body or its administrator as receiver. If said public body or its administrator accepts the appointment, it or he or she shall have all the rights, powers, and duties of the department as receiver under this chapter and all the rights, powers, and duties as conferred by other applicable law. The public body or its administrator may act as receiver without bond.

§ 7-1-152

No financial institution shall make a general assignment of its business and property for the benefit of its creditors by the appointment of an assignee or a trustee or otherwise. In lieu of the power to make an assignment for the benefit of creditors, a financial institution may request the department to take possession as provided in this part. In such cases, the department shall take possession and become receiver in the same manner and subject to the same provisions of this chapter as when it takes possession of the business and property of a financial institution without the request of such financial institution.

§ 7-1-153

The department, upon taking possession of the business and property of a financial institution as receiver, shall post notice of such fact on the front door of all offices of the institution open to the public for the transaction of business in person.

§ 7-1-154

The department shall immediately after taking possession file with the principal court a certificate to be known as the certificate of possession, setting forth the facts on the basis of which it has taken possession. The certificate shall state the name of the deputy receiver, if any, whom the department, pursuant to this chapter, appoints to take charge of the affairs of the financial institution, together with the duties of such deputy receiver. If the department does not appoint a deputy receiver prior to the date of the filing of the certificate of possession or if it appoints a new deputy receiver or an additional one or if it adds to the duties of the deputy receiver, it shall file a supplement to the certificate of possession setting forth such acts. The certificate of possession and any supplement thereto shall be listed in the judgment index in the name of the financial institution as defendant and of the department as plaintiff.

§ 7-1-155

Any financial institution of whose business or property the department has taken possession as receiver may, at any time within ten days after the department has become receiver, apply to the principal court for an order requiring the department to show cause why it should not be enjoined from continuing as receiver. Service may be made in such action by serving the commissioner personally or by leaving a copy with the deputy in charge of his or her office in the department or by serving the deputy receiver appointed by the department to manage the affairs of such financial institution. The court shall, after a hearing upon the merits, either dismiss the application or order the department to surrender to the financial institution possession of its business and property; but no such injunction shall issue where the department has been appointed receiver by action of a court of competent jurisdiction or by action of the financial institution itself, in accordance with this chapter. Such application for injunction may in the discretion of the court be heard at any time after service as provided in this Code section, with the right by either party to appeal, as in other cases of applications for temporary injunction.

§ 7-1-156

(a) Except as otherwise provided in this chapter, the department, when it has taken possession of a financial institution, shall be responsible to the principal court and not to any other court. All actions against the department or any official of it involving a financial institution which is or has been in the department's possession shall be brought in the principal court.

(b) The principal court shall sit as a court of equity. It shall have the power, upon petition of the department, to make and enforce any appropriate order to enable the department, with the utmost dispatch, to discharge its duties in connection with the business and property of any financial institution of which it has taken possession.

(c) The court shall grant to any party against whom an order is sought the right to appear, within ten days after notice is given, to show cause why the order should not be made. The court shall have the power, at the end of the ten-day period, ex parte if the other party does not appear to show cause, or upon the merits if the party does appear, to issue the aforementioned order.

(d) Whenever this chapter empowers the department as receiver to take any action with the leave of court, the department shall give the financial institution and its creditors, depositors, and shareholders ten days' notice of its proposed action before seeking the approval of the court, provided that the court may, upon cause shown, shorten the time or dispense with such notice or direct that it be sent to only specified parties. In determining what, if any, notice shall be provided, the court may consider, among other factors, the necessity for immediate action in the interest of the financial institution as a whole and whether the interests of potential addressees are actually at stake. Where parties object to the proposed action of the department, the court shall allow them an opportunity to present their views appropriate to the nature of the case.

§ 7-1-157

(a) The department in possession shall be vested with all the rights, powers, and duties of such financial institution; with the title or the right to possession of all property to which the financial institution has title or the right to possession, including debts due, and liens and other security therefor; and with the financial institution's rights of action or redemption. This shall be so whether such property and debts due, such liens or other security therefor, or such rights of action or redemption are held in the name of such financial institution or in the name of some other corporation or person.

(b) The department shall be the representative of the creditors of the financial institution and shall be entitled, as such, to have vacated and set aside, for the benefit of the creditors, any judgment, execution, attachment, sequestration, payment, security interest, assignment, transfer, conveyance, or encumbrance which could have been avoided by any of the creditors or by which one creditor is given a preference over another. As used in this subsection, the term “preference” means all transfers of the assets of a financial institution made or suffered, either after or in contemplation of insolvency, for the purpose of allowing a creditor to gain more than his ratable share of the assets of the institution as determined by Code Section 7-1-202.

(c) The department is authorized to collect all moneys due to the financial institution and to do such other acts as are necessary to conserve its assets and business. In exercising its power as receiver, the department shall give first consideration to the interests of depositors and other creditors as a whole and shall give consideration to the interests of shareholders and other owners only when depositors and other creditors have received or are assured of full payment of their claims.

(d) The department as receiver shall have the power to execute in its name or in the name of the financial institution any instrument necessary or proper to effectuate its powers or perform its duties as receiver. Any instrument executed in the name of the institution pursuant to the authority given by this subsection shall be valid and effectual for all purposes as though executed by proper officers of the institution by authority of its board of directors or other governing body.

§ 7-1-158

The department may appoint one or more official agents, to be known as deputy receivers, to assist it in the management, reorganization, consolidation, liquidation, or distribution of the assets and affairs of any financial institution of which it has taken possession as receiver. The department may delegate to each deputy receiver any duty imposed upon or any right or power granted to it as receiver. The department may also employ such other assistants as it deems necessary, including such assistant attorneys general or other attorneys as may be appointed by the Attorney General or independently retained by the department in connection with the receivership. The department may also retain, to assist it in the management, reorganization, consolidation, liquidation, or distribution, any officer or other employee of the financial institution of which it has taken possession.

§ 7-1-159

The department is authorized, upon taking possession of the business and property of a financial institution as receiver, to continue or to suspend the business for such period as it may deem necessary to enable it to determine whether to surrender such possession to the financial institution, to authorize a merger or consolidation, to liquidate the affairs of such financial institution, or to take such other action as is authorized by law.

§ 7-1-160

The department shall, within six months after the date on which it takes possession of any financial institution as receiver, determine whether or not to liquidate the business and property and distribute the assets of the financial institution. If it shall determine to liquidate, it shall forthwith file with the principal court a supplement to the certificate of possession, setting forth this determination. The department shall then proceed to liquidate the affairs of the financial institution with as much dispatch as shall appear to be expedient under the circumstances.

§ 7-1-161

Except where otherwise specifically provided, all powers and duties granted by this chapter to the department in possession of the business and property of a financial institution as receiver may be exercised by it both before and after its formal determination, pursuant to this chapter, to liquidate the affairs of such financial institution.

§ 7-1-162

(a) When the department has taken possession of the business and property of a financial institution as receiver, it shall forthwith prepare a complete and detailed inventory of the assets of such financial institution. The inventory shall be verified by oath or affirmation of the commissioner or other person making it.

(b) As soon as expedient after taking possession, the department shall cause a complete appraisement of the assets of the financial institution to be made, in duplicate, under oath or affirmation, by not less than two nor more than three disinterested appraisers selected by it. Such appraisement shall be included upon the same document or documents as the inventory. The value of the assets shall be computed in the appraisement as of the date on which the department took possession.

(c) The original and duplicate of the inventory and appraisement shall be filed in the office of the commissioner. However, if the commissioner shall determine, in accordance with this chapter, to liquidate the affairs of the financial institution, he shall immediately, after the determination to liquidate, file the duplicate inventory and appraisement with the principal court.

(d) When the department takes possession of business and property of a financial institution which in the two immediately preceding reports of condition filed in accordance with subsection (a) of Code Section 7-1-68 reported assets of less than $150,000.00, the department shall not be required to secure an appraisement of the assets of the financial institution under subsection (b) of this Code section or to file an appraisement of the assets with a determination to liquidate under subsection (c) of this Code section, unless the principal court, upon application by a shareholder or creditor, shall otherwise order.

§ 7-1-163

(a) Upon becoming receiver, the department shall forthwith give notice in writing of such fact to all corporations and persons having custody or possession of any assets or other property of the financial institution in receivership or of any other property with respect to which such institution has a right to possession or custody for any purpose whatsoever.

(b) The principal court shall have the power, except in cases where a jury trial is requested, upon petition of the department, to order any corporation or person which has custody or possession of assets or other property to which such financial institution shall have the right of custody or possession, for any reason whatsoever, to transfer or convey such property to the department and to execute and deliver any instrument necessary to accomplish that purpose.

§ 7-1-164

The department may, without leave of court, borrow money from any federal or state public body or from any person or corporation and grant as security therefor any real or personal property of the financial institution for the purpose of facilitating the liquidation, reorganization, or rehabilitation of the financial institution. The repayment of money borrowed under this Code section and interest thereon shall be considered an expense of administration under Code Sections 7-1-197 and 7-1-202.

§ 7-1-165

The department may, with leave of court, surrender to the financial institution real or personal property which it finds to be burdensome and of no advantage to the depositors or other creditors of the institution. It may likewise, with leave of court, convey title to any holder of a mortgage, security deed, security interest, or a lien against property in its possession, where it shall appear that to continue to hold such property is burdensome and of no advantage to the financial institution, its depositors, or other creditors.

§ 7-1-166

(a) The department may, with leave of court, compound or compromise any debt, claim, or judgment due to the financial institution in receivership and discontinue any action or other proceeding pending therefor.

(b) The department may, without leave of court, enter into an agreement in writing upon such terms as shall seem reasonable to it to extend, for a period not to exceed three years, the maturity of any mortgage or security deed obligation in its possession. However, the department shall not enter into any agreement extending any such obligation which shall have been pledged by the financial institution of which it is in possession as receiver unless it shall first obtain the written consent of the pledgee of such mortgage to such extension. The department may likewise renew or extend, for limited periods, other notes and drafts held by the financial institution.

§ 7-1-167

The department may, with leave of court, pay off all mortgages, security deeds, security agreements, and liens of or upon any real or personal property which belong to the financial institution. It may, without leave of court, purchase, at a judicial sale or at any sale authorized by an order of a court of competent jurisdiction, any real or personal property in order to protect any equity which the financial institution has in such real or personal property.

§ 7-1-168

The department may, with leave of and upon the terms and conditions prescribed by the court, sell any real property of the financial institution of which it is in possession as receiver. The order of the court authorizing such sale shall state whether the sale shall be entirely for cash or partly for cash and partly for evidences of indebtedness and whether it shall be public or private. Each such sale of real property shall be confirmed by the court if all the terms and conditions of its order authorizing such sale have been complied with. If the real property is located in this state but in a county other than the county of the principal court, the department shall file a certified copy of all orders relating to the property in the office of the clerk of the superior court of the county where the real property is located.

§ 7-1-169

The department may, without leave of court, enter into leases for a period not to exceed one year of real or personal property belonging to the financial institution in receivership. It may, with leave of court, enter into such leases for a period not to exceed ten years, upon the terms and under the conditions prescribed by the order of the court.

§ 7-1-170

(a) The department may, without leave of court, sell on any stock exchange or otherwise, at such times and in such manner as it may deem advisable, listed or unlisted securities which belong to the financial institution in receivership.

(b) The department may, without leave of court, exchange listed or unlisted securities for other securities of the corporation issuing the securities or of a corporation which has merged or consolidated with or has taken over such corporation.

(c) The department may, without leave of court, sell any mortgage or other lien upon real property or any judgment, at such times and in such manner as it shall deem to be advisable.

(d) Except as otherwise specifically provided by this chapter, the department may, without leave of court, sell:

(1) At public sale; or

(2) At private sale, for a net consideration not below the amount at which such personal property has been valued in the appraisement required by this chapter,

any personal property which belongs to the financial institution in receivership or which such financial institution has the power to sell. It may, with leave of court, sell such personal property at private sale upon such terms and under such conditions as the court shall prescribe to be commercially reasonable.

§ 7-1-171

All moneys received by the department as receiver of a financial institution except those moneys necessary to administer the liquidation shall be deposited by it in interest-bearing accounts with one or more institutions authorized by law to receive deposits and subject to the supervision of either federal or state regulatory authorities. It shall require of such depository security therefor, in such amount and of such nature as the department shall deem adequate.

§ 7-1-172

(a) The department may, any time after taking possession of a financial institution as receiver, give written notice to anyone claiming or appearing on the books of such financial institution to be the owner or to be entitled to the possession of any personal property left with such financial institution as bailee for safekeeping or depository for hire and to anyone appearing on the books of the financial institution to be the lessee of any safe, vault, or safe-deposit box, notifying such bailor, depositor, or lessee, respectively, to remove all such personal property within the period fixed by the notice, provided that such period shall in no case be less than 60 days after the date of the notice.

(b) At the expiration of such period, if the lessee of a safe, vault, or safe-deposit box has not removed the contents thereof, the department may open such safe, vault, or safe-deposit box in the presence of a notary public not an officer or employee of the financial institution or of the department. The contents, if any, of such safe, vault, or safe-deposit box shall then be sealed and marked by such notary with the name and address of the lessee in whose name such safe, vault, or safe-deposit box appeared on the books of the financial institution and with a list and description of the property therein. The department shall hold such property until it is delivered to the owner or those claiming through him or is disposed of under Article 5 of Chapter 12 of Title 44 and, while holding such property may take such action as it deems appropriate to protect the interest of the owner therein, including reducing the property to cash.

(c) The department shall follow the same procedure and have the same powers with regard to the property left with the financial institution as bailee for safekeeping or depository for hire and not called for within the period specified by the notice.

(d) The contract of bailment, deposit, or lease, if any, shall be considered at an end upon the date designated by the commissioner for the removal of the property therein. The amount of unearned rent or charges, if any, paid by the bailor, depositor, or lessee, shall become a debt of the financial institution.

§ 7-1-173

(a) For the purpose of executing any of the powers and performing any of the duties respectively conferred or imposed upon it, as receiver, by this chapter, the department may, in its name as receiver of such financial institution, prosecute any action at law or in equity in any court of this state or of any other state or in any federal court, whether or not such action is pending on behalf of the financial institution at the time it takes possession. It may likewise defend any action at law or in equity pending against the financial institution at the time it takes possession. The department may, in its name as receiver of a corporation, institute and maintain any action which any director, officer, or such corporation or any shareholder or creditor thereof could have instituted or maintained.

(b) Notwithstanding the provisions of other laws to the contrary, the statute of limitations on all causes of action which may accrue to any financial institution over whose affairs the department is receiver shall be extended for a period of six months.

§ 7-1-174

(a) The department may, upon conditions approved by it, surrender possession of a financial institution in receivership at any time prior to final liquidation and distribution under the following circumstances:

(1) It may surrender possession to the financial institution itself when it finds the institution to be in a safe and sound condition to resume its business; or

(2) It may surrender to the financial institution itself or to any other corporation or person possession of all or part of the business, property, moneys, credits, or other assets of the financial institution in receivership, to permit to be carried into effect a special plan of liquidation, reorganization, or rehabilitation under the requirements of this Code section.

(b) Before the department may surrender possession of any of the assets of a financial institution pursuant to a special plan of liquidation, such plan shall have been approved by the principal court and a majority of creditors (including depositors) of the institution, both as to number of creditors and as to the amount of claims.

(c) Before the department may surrender possession of any of the assets of a financial institution pursuant to a special plan of reorganization or rehabilitation, such plan shall have the same approvals as required under subsection (b) of this Code section and, in addition, shall be approved by the affirmative vote of the holders of a majority of shares entitled to vote thereon.

(d) Whenever the department shall surrender possession under this Code section, it shall forthwith file with the principal court a supplement to the certificate of possession, setting forth in detail all the conditions and purposes of such surrender. This supplement shall be indexed in a manner which will, insofar as necessary, satisfy the prior record of the certificate of possession.

(e) Whenever the department shall, under this Code section, surrender possession of the entire business and property of a financial institution in receivership, it shall file in the principal court an account, which shall correspond to any other final account under this chapter. Such account shall be subject to exceptions by shareholders, or depositors, or other creditors, and to confirmation by the court, in the same manner as is provided by this chapter for any account filed by the department as receiver.

§ 7-1-175

Within 180 days after the department takes possession of a financial institution, the department, as receiver, may at its election reject any executory contract to which the financial institution is party without further liability to the financial institution or the receiver or may reject any obligation of the financial institution as a lessee of real or personal property. The department's election to reject a lease creates no claim for rent other than rent accrued to the date of termination or for actual damages, if any, for such termination, not to exceed the equivalent of six months' payment.

§ 7-1-176

(a) Whenever the department as receiver, with leave of court as provided in Code Section 7-1-156, undertakes to sell all or part of the assets of a financial institution in its possession in consideration of the assumption by the purchaser of the liabilities due to depositors and other creditors other than the holders of subordinated securities, the department shall be under no further obligation to file any inventory, appraisement, partial accounting, or deliver any notice to creditors other than holders of subordinated securities until the filing of the final accounting unless otherwise directed by the court.

(b) Notwithstanding any other law to the contrary, in facilitation of a purchase of assets and assumption of liabilities as described in subsection (a) of this Code section, all or any part of the assets may be sold to the deposit insurer for the financial institution in liquidation notwithstanding such insurer's capacity as receiver or deputy receiver of the financial institution. Such insurer as receiver or deputy receiver may also borrow from itself in its corporate capacity any amounts necessary to facilitate the assumption of deposit liabilities by an existing financial institution or a newly chartered financial institution, assigning any part or all of the assets of the closed bank as security for such loan.

§ 7-1-190

(a) The status of all parties shall become fixed on the date the department takes possession of a financial institution. No corporation or person shall thereafter acquire any lien or charge against the financial institution for so long as it remains in receivership, provided that nothing in this Code section or elsewhere in this chapter shall be construed to impair any preferred claim arising pursuant to Code Section 11-4-214.

(b) No execution, attachment, or repossession (whether by action or otherwise) shall issue or be proceeded with against any assets owned by or in the custody or possession of a financial institution in receivership. In lieu of the right to issue an attachment or execution against assets of or lawfully in the possession or custody of the financial institution, a plaintiff may proceed by giving written notice of his claim to the department or to the deputy receiver of such financial institution; and he shall thereafter prove his claim in the regular manner prescribed by this chapter. If, in filing its account, the department rejects the claimed right to execution or attachment, the court shall adjudicate the matter as in the case of other disputed claims.

§ 7-1-191

All claims against the financial institution, action upon which has not been commenced prior to the time the department took possession, shall be presented in the regular manner provided by this chapter for the presentation of claims. Neither a depositor or other creditor of the financial institution nor any other claimant may maintain any action at law or in equity upon such claim, except by regular method provided by this chapter for exceptions to the accounting of the department as receiver. However, an action for the return of specific property or property with respect to which the plaintiff holds a perfected security interest or security title which could have been recovered by the plaintiff from the financial institution in receivership may be maintained in the principal court against the department in its name as receiver of the financial institution. All actions pending against the financial institution when the department takes possession shall be automatically stayed during the receivership, provided that all such actions, except those specified in subsection (b) of Code Section 7-1-190, may proceed with prior approval of the principal court.

§ 7-1-192

(a) After filing a supplement to the certificate of possession setting forth its determination to liquidate the affairs of a financial institution in receivership, the department shall forthwith give notice of such determination to all corporations or persons who appear upon the books of the financial institution as depositors or other creditors or who are otherwise known to the department to be or who claim to be depositors or other creditors or who have given notice to the department claiming a right of execution or attachment against any assets owned by or legally in the custody or possession of the financial institution.

(b) The notice to depositors shall state the amount which the books or other records of the financial institution show to be due to such depositor. It shall also state that unless such depositor shall, within a specified time, present to the department his bank statement or passbook or other evidence of his account showing a different amount to be due or unless such depositor shall, within a specified time from the date of such notice, otherwise prove in the manner provided by this chapter that a different amount is due, the amount shown to be due by the books of the financial institution will be conclusively presumed to be correct unless the court, pursuant to this chapter, grants him an extension of time.

(c) The notice to each creditor, other than a depositor, shall inform such creditor that he must present his claim in the manner provided by this chapter within a specified time from the date of such notice or else be permanently barred from sharing in any distribution of the assets of the financial institution unless the court, pursuant to this chapter, grants him an extension of time.

(d) The department shall also advertise, in the manner prescribed by this chapter, its determination to liquidate the financial institution. Such advertisement shall state that the department has filed an inventory and appraisement of the assets of the institution and shall designate the superior court with which such documents have been filed and shall describe the legal consequences to depositors and other creditors of failure to prove those claims within the time set in the notice. For purposes of this advertisement and other notices or advertisements required hereunder, the department may, to the extent it deems appropriate, describe shareholders of credit unions as such, not by use of the defined term “depositors” used in this chapter.

(e) The department shall specify as the last day upon which depositors and other creditors can prove their claims a date at least 30 days after the date of the sending of such notice to depositors and creditors. However, claims based upon deficiencies in, or surcharges with respect to, assets which such financial institution held in a fiduciary capacity may be proved at any time within six months after the appointment of a substituted fiduciary of the estate of which such assets were a part and the adjudication of the account of such estate by the competent court.

§ 7-1-193

(a) Any depositor who disagrees with the amount shown by the books or other records of the financial institution to be due to him shall prove his claim by presenting his bank statement or passbook or other documentary indication of indebtedness to the department within the time and in the manner designated by the department pursuant to this chapter. Any such depositor who shall not have received or shall have lost his bank statement or passbook or other documentary evidence or who shall believe that the amount shown to be due him by such bank statement or passbook or other documentary evidence is incorrect shall, within the time designated by the department, present his claim to the department by whatever method, including affidavits, the department shall designate.

(b) Any depositor who shall not present his claim within the designated time and in the manner provided by this Code section shall be bound by the amount appearing to be due to him upon the books or records of the financial institution or, where the name of such depositor does not appear at all upon the books or records of the financial institution or appears on such books or records but with no balance appearing to be due to him by the financial institution, shall be permanently barred from sharing in any distribution of the assets of the financial institution. However, the principal court may, upon petition and adequate cause shown, permit any depositor to file his claim at a later date, but no claim shall in any event be allowed to be filed after the last day for the filing of exceptions to the first account of the department.

(c) This Code section shall not, however, be construed to deprive any depositor of any right of action at law or in equity which he may have against an officer or employee or former officer or employee of the financial institution or upon the bond of such officer or employee or former officer or employee for any act committed by such officer or employee which resulted in such depositor's name not appearing upon the books of the financial institution or appearing upon them but being credited with an amount below that actually due.

(d) The department shall prescribe the form for the proof of claim of all depositors and for an affidavit as to the truth of statements therein to be included with the claim. Whenever requested by any such depositor to prepare such proof of claim or to take the affidavit thereto, the department may do so without any charge to such depositor if the department concludes that it would be burdensome or difficult for the depositor to prepare the proof.

§ 7-1-194

Creditors other than depositors shall not share in any distribution of the assets of the financial institution unless the creditor or his designated representative shall, within the time and in the manner specified by the department pursuant to this chapter, present to the department a statement of his claim, together with a copy of any book entries pertaining thereto, any evidence of indebtedness or other instrument received as evidence thereof, the details with respect to any collateral or agreement of pledge received in connection therewith, and a description of any insurance pertaining thereto. The department shall prescribe the form for the proof of claim of creditors and for affidavit as to the truth of statements therein to be included with the claim. However, the court may, upon petition and adequate cause shown, permit any creditor to file his claim upon a later date, but no claim shall in any event be allowed to be filed after the last day for the filing of exceptions to the first account of the department.

§ 7-1-195

For the purposes of the accounting provided for in this chapter, the department shall allow the claims of depositors for the amounts shown to be due to them upon the books or other records of the financial institution (unless it determines such books or records to be in error) or for such other amounts as they shall, within the time and in the manner provided by this chapter, prove to the satisfaction of the department are due to them. It shall likewise allow the claims of all other creditors, when presented within the time and in the manner provided by this chapter, if it shall be satisfied that the amounts claimed are rightfully due. In allowing claims, the department may change their rank to that which it determines to be proper and may reduce them by exercise of the financial institution's right of setoff against the claimant. It shall reject all other claims of depositors and other creditors.

§ 7-1-196

(a) After filing a supplement to the certificate of possession setting forth its determination to liquidate the affairs of the financial institution, the department may, without leave of court and without filing an account, make an advance payment of a dividend to all depositors the amounts of whose claims, as they appear upon the books or other records of the financial institution, are undisputed. The dividend shall be calculated as if the claims of all other depositors, as they appear upon the books or other records of the financial institution, and the claims of all creditors or other corporations or persons who assert priority over or parity with depositors in the order of distribution of the assets, were valid and uncontested.

(b) However, the department shall not make such an advance payment of a dividend to any depositor until it shall have set aside an amount sufficient to pay in full the claims of all creditors or other corporations or persons asserting or entitled to priority over depositors in the order of distribution and to pay the proportionate dividend on the amounts claimed by the other depositors and by any creditors or other corporations or persons who are entitled to or who claim parity with depositors in the order of distribution provided for by law. The department shall likewise set aside, before making such advance payment, such amount as it shall deem necessary for the expenses of administration of the receivership.

§ 7-1-197

Any reasonable expenditure made by the department as receiver of a financial institution, including any expense incurred in the management, reorganization, consolidation, liquidation, or distribution of the assets and affairs of the financial institution, any payment of a loan or interest thereon under Code Section 7-1-164, and any compensation paid to the deputy receiver, attorneys, or any other person employed to assist the department in such management, reorganization, consolidation, liquidation, or distribution shall be paid out of the assets of the financial institution, provided it is included in any partial or final account filed by the department pursuant to this chapter and is approved by the principal court in which such account is filed. Where such expenses are incurred or such compensation is paid for the benefit of the estate of more than one financial institution in the possession of the department as receiver, an equitable portion of such expenses or compensation shall be paid out of the assets of each financial institution on whose behalf such expenditures were incurred or paid.

§ 7-1-198

(a) At any time after the expiration of the period fixed by the department for the presentation of claims, it may file a partial account of its administration of the business and property of the financial institution, duly verified under oath or affirmation, with the principal court. If the department does not file its first account within one year after it takes possession of a financial institution, any depositor, other creditor, or shareholder of such financial institution may petition the court to order the department to file an account. The court may, in its discretion, grant or refuse the petition. Whenever it becomes economically advisable to wind up finally the affairs of a financial institution in liquidation, the department shall file with the principal court its final account, duly verified under oath or affirmation. The clerk of the principal court shall not be under any duty to recopy or otherwise to record any account and shall make no charge except the regular fee for filing such or similar papers.

(b) The account shall present the department's administration of the estate, including a statement of all receipts or expenditures, a list of all claims which have been allowed, and a separate list of claims which have been objected to or are disputed, showing as to all depositors and other creditors, their names and addresses, the amounts due or claimed to be due to them, and any priorities in the order of distribution granted to or claimed by them. A final account need not present matters previously settled incident to partial accounts.

(c) The department shall forthwith give written or printed notice of the filing of an account to all corporations or persons whom it knows to be, or who claim to be depositors or other creditors or who have given to it notice claiming a right of attachment or execution. Such notice shall also state that unless an exception to the account or to any item therein is filed with the principal court within 30 days from the date of the filing thereof, it will be confirmed absolutely. The department shall also advertise such notice in a newspaper or newspapers as provided in this chapter, stating the date upon which it has filed its partial or final account and that all exceptions to the account must be filed within 30 days from the date of the filing of the account. The department shall forthwith file with the court, under oath or affirmation, a statement that it has, in the manner provided by this chapter, sent both the notice of its determination to liquidate and the notice of its filing of an account to all corporations or persons entitled thereto. The department shall also file the proofs of publication of the advertisements required by this Code section.

(d) Any corporation or person who is or who claims to be a depositor, other creditor, or shareholder of a financial institution or who has given to the department notice of his claim to the right of execution or attachment or who asserts any other type of claim against a financial institution may, within 30 days after the filing of an account by the department, file in the principal court specific exceptions in writing, under oath or affirmation, to such account or to any item therein. Notice of any exception to an individual item in an account shall forthwith be personally served upon or sent by registered or certified mail or statutory overnight delivery to the corporation or person whose claim is thus objected to or his counsel and also the department or the deputy receiver managing the affairs of the particular financial institution or the counsel of either. Affidavit of the serving or sending of such notice shall forthwith be filed with the court.

(e) Whenever an exception is filed to any expenditure made by the department as an expense of administration, the department shall keep an accurate record of the salaries and other expenses properly incurred by it in the contesting of such exception. If the exception is overruled and the expenditure is sustained, the court may, in its discretion, assess such expenses and salaries, together with the regular costs provided by law, upon the depositor, other creditor, or shareholder filing such exception.

§ 7-1-199

(a) If any claim has been rejected by the department or any exception has been filed to the account or to any item thereof, the principal court shall, as soon as expedient after the expiration of the period for the filing of exceptions to the account, fix a date for hearing in court arguments on all rejected claims and all exceptions to the account or to any item thereof. The department shall give notice of such hearing to all corporations or persons whose claims have been rejected by the department or objected to in the manner provided by this chapter. It shall likewise give notice to all corporations or persons who have filed exceptions to the account or to any item thereof. Such notice shall set forth, insofar as possible, the reasons for the rejection of the claim or the nature of the exception to the item of the account and shall state that all parties whose claims are rejected or objected to must appear in the principal court upon the date fixed by the court to prove their claims or they will be bound by the ex parte decision of the court.

(b) The principal court in which the account is filed shall itself hear arguments upon any rejected claim or upon any exception to an account, or to any item thereof, upon the date fixed by it for this purpose. The court shall itself decide, without delay, all matters in controversy. If any party does not appear in court on the day fixed, the court shall conduct the hearing ex parte and shall render its decision upon the merits as they appear after such hearing.

§ 7-1-200

(a) If the department has approved all depositors' claims, as proved by them pursuant to this chapter or if not proved as they appear upon the books or other records of the financial institution and if no exception has been filed to an account or to any item thereof within 30 days after the filing of such account by the department, the principal court shall confirm the account absolutely. If any funds are available for distribution, the department shall then declare and pay out of such funds a partial or a final dividend, according to the priorities established by law. If the department has rejected any deposit or claim or if any exception has been filed, the court shall confirm the account as to all other matters and claims. The department may then declare and pay out of the funds available for distribution, if any, a dividend, according to the priorities established by law. The dividend shall be calculated as if all deposits and other claims were valid and approved. The department, before paying any such dividend, shall set apart funds or assets sufficient to pay required distribution on any claim still being asserted which has been rejected or reduced in priority by the department or to which an exception has been filed if the amount and the priority claimed were sustained by the court. If any such claim shall be determined by the court to be valid, the department shall pay to the corporation or person entitled thereto the dividend which has been set apart in the manner provided by this Code section. If any such claim shall be determined by the court to be invalid, the dividend which has been set apart in the manner provided by this Code section shall be distributed in the order of the priorities established by law to those whose claims have been approved by the court; provided, however, that any final determination as to disputed claims may be appealed as provided by law and payments may be withheld pending the results of the appeal.

(b) The confirmation of any account after the adjudication of all claims therein which have been rejected or reduced in priority by the department or to which exceptions have been filed and of all other exceptions to such account shall be conclusive as to all matters therein. Except as otherwise provided in this chapter, no claim of any depositor or other creditor shall be valid if not listed and approved in the first account which has been filed. The confirmation of the final account and distribution thereunder shall discharge the department, the commissioner, the deputy receiver, any other employee, and the legal counsel, as well as the surety for any of them, from all further civil liability for any act done in an official capacity with respect to the receivership.

(c) Upon confirmation of the final account the department may impound the balance of the assets, including real property, remaining in its hands and shall not be obligated to sell such assets or actively to collect on the impounded assets. With regard to said assets, including real estate and including after-discovered assets, it shall, however, retain all of its powers to receive payment for them or, with leave of court, to adjust or compromise them. After its final accounting and discharge, the department shall have power to make further distribution to the creditors, depositors, and shareholders when, in its opinion, sufficient funds are realized to justify such distribution after deducting reasonable costs for collection, preservation, and distribution. If the department is of the opinion that the funds collected or probably to be collected will be insufficient to make a distribution practicable and that all interested claimants will not in the future have their claims satisfied, it shall, after deducting reasonable costs for collection and preservation, hold the remainder of such property subject to Article 5 of Chapter 12 of Title 44. Thereafter, the articles of incorporation or charter shall no longer be valid and the department shall notify the Secretary of State that the receivership has been concluded. The Secretary of State shall promptly cancel such articles or charter of record in that office.

§ 7-1-201

Whenever a dividend remains unclaimed six months after it has been declared and the department is unable to locate the depositor or other claimant to whom said dividend was payable, the dividend shall become a part of the general assets of the financial institution and be distributed as other assets.

§ 7-1-202

(a) In the distribution of the assets of a financial institution which is liquidated or dissolved, whether under this chapter or by any other method, the order of payment of liabilities of the financial institution in the event that its assets are insufficient to pay in full all its liabilities for which claims are duly made shall be:

(1) First, the payment of costs and expenses of administration of the liquidation or dissolution;

(2) Second, the payment of debts due depositors;

(3) Third, the payment of all state taxes;

(4) Fourth, judgments;

(5) Fifth, contractual obligations;

(6) Sixth, unliquidated claims for damages and the like;

(7) Seventh, capital securities.

(b) Nothing in this chapter shall impair the validity or the priority otherwise accorded by law to any security interest, security title, preferred claim arising under Code Section 11-4-214, or any lien arising by force of law; provided, however, any of the foregoing may be delayed in payment by the principal court until costs of administration including loans or interest payments under Code Section 7-1-164 or the costs of selling or otherwise disposing of assets under this chapter have been met in any case where the principal court determines that the claimant of the security interest, security title, preferred claim, or lien has expressly or impliedly consented to the administrative activities involved or has benefited from such activities.

§ 7-1-203

Where the deposits or shares of a financial institution are insured by a federal public body or otherwise, the claims of depositors shall be subrogated in favor of said insurer to the extent that it pays or makes available for payment claims of such depositors against the financial institution, provided that the rights of such depositors to receive dividends or other distributions upon that portion of their claims not made available for payment shall not be affected by such subrogation.

§ 7-1-204

If any unliquidated assets remain in the department's possession after the filing and confirmation of its final account, the payment in full of the claims of all depositors, creditors, and other claimants which have been approved by the court and the distribution to shareholders of any cash balance remaining thereafter, it shall call a meeting of all the shareholders of the financial institution by giving them written notice at least 30 days before the day fixed for the meeting. At such meeting, the shareholders shall elect by ballot a trustee or trustees, who shall complete the liquidation. A majority of the shares present in person or by proxy shall be necessary to elect such trustee or trustees. The department shall file a certified copy of the minutes of said meeting with the principal court. If no trustee is elected in this manner on the day designated, the department shall petition the principal court for the appointment of a trustee or trustees. The trustee or trustees who are thus elected by the shareholders or appointed by the court shall give bond to the state, in such amount, with such surety, and under such conditions as the court may direct. The department shall then transfer to such trustee or trustees all the assets of the financial institution which are still in its possession. After such transfer by the department to a trustee or trustees for the benefit of the shareholders, the financial institution shall have no corporate powers or privileges whatsoever, except that its shareholders may elect a successor trustee or trustees upon death, removal, or inability of the first trustee or trustees to act. The trustee or trustees shall not succeed to any powers or privileges except such as shall be necessary to the liquidation of the remaining assets which have been transferred to such trustee or trustees by the department.

§ 7-1-205

The department is authorized to destroy all records of the financial institution of which it was in possession as receiver and all records of such receivership at the expiration of six years from the date of the absolute confirmation of its final account, except where any provision of this chapter expressly provides a different method for the disposition of the records or a longer period for their preservation.

§ 7-1-220

(a) As used in this part, the term:

(1) “Pooled assets” means mortgages, securities, or other assets comprising any mortgage or securities pool operated by such financial institution (whether said assets are held in the name of the institution or a nominee therefor) or with respect to which undivided interests have been created, regardless of whether or not the financial institution is technically a trustee and regardless of whether or not certificates of participation have been issued with respect thereto.

(2) “Trust assets” means all assets held by financial institutions as trustee, administrator, executor, guardian, or in a similar fiduciary capacity but shall not include assets held by the commercial department of the financial institution or pooled assets, as defined in paragraph (1) of this subsection.

(b) In the event of conflict, this part and not other parts of this article or other articles of this chapter shall control as to the trust assets and the pooled assets of any financial institution in receivership.

§ 7-1-221

(a) Upon taking possession of a financial institution, the department shall hold trust and pooled assets separate from the assets of the financial institution itself. Trust and pooled assets shall not be available for distribution to depositors, other creditors, or shareholders.

(b) The department as receiver shall have all rights, powers, and duties of the financial institution in regard to trust and pooled assets, including title to the assets and the right to administer them.

§ 7-1-222

The principal court shall have exclusive jurisdiction over all matters concerning trust and pooled assets during the period that such assets are held by the department as receiver.

§ 7-1-223

(a) Upon determining to liquidate a financial institution or if it otherwise deems it advisable, the department shall:

(1) With leave of court, transfer all of the trust assets or all of the pooled assets or all of both types of assets to another financial institution which shall assume the responsibilities of the institution in receivership in regard to such assets and act as substituted trustee or manager; or

(2) Give written notice, insofar as the giving of such notice is practicable, to all parties interested in trust or pooled assets that they must within 30 days after the giving of notice apply for the appointment of a substituted trustee or manager to take over the trust or pooled assets. In the event that no such application is made with respect to particular trust assets or pooled assets, the department shall itself apply for appointment of a substituted trustee or manager. Upon application by an interested party or parties or by the department, the court shall appoint as successor trustee or manager that person or corporation best able, in its judgment, to protect the interests of those interested in particular trust or pooled assets. The successor trustees or managers shall have all rights, powers, and duties of the financial institution in regard to the trust or pooled assets committed to them except as these relationships may be modified by the court in accordance with law.

(b) Nothing in this Code section or Code Section 7-1-222 shall be construed to impair any right of the grantor or beneficiaries of trust or pooled assets under applicable instruments or otherwise to secure or provide for the appointment of a substituted trustee or manager.

§ 7-1-224

In the event that the department and a substituted trustee or manager agree as to the identity and amount of the trust or pooled assets to be paid to the substituted trustee or manager and the substituted trustee or manager waives in writing the right to an accounting, then the department may transfer the trust or pooled assets to the substituted trustee or manager and will thereupon (together with the financial institution) be discharged from all liability or responsibility in connection with the trust or pooled assets.

§ 7-1-225

Except as authorized by Code Section 7-1-224, the department shall, upon appointment of a substituted trustee or manager, file a full account with the appropriate court setting forth its administration of the trust or pooled assets and shall, upon the order of the court, transfer the trust or pooled assets to the substituted trustee or manager. Whenever the court shall determine that there is a deficiency in regard to the trust or pooled assets or that the financial institution is liable for a surcharge in connection therewith, the amount thereof shall constitute a claim against the financial institution. Such claim shall be filed in the manner of other claims with the principal court within 30 days of a final adjudication with respect to the amount thereof.

§ 7-1-230

As used in this part, the term:

(1) “Concert with one or more persons” includes, but is not limited to, the following persons and relationships:

(A) A company and any controlling shareholder, partner, trustee, or management official of the company if both the company and the individual own voting securities of the financial institution;

(B) An individual and the individual's immediate family;

(D) Persons that are parties to any agreement, contract, understanding, or other arrangement, whether written or otherwise, regarding the acquisition, voting, or transfer of control of voting securities of a financial institution;

(E) Persons that have made, or propose to make, a joint filing under Section 13 or 14 of the Securities Exchange Act of 1934 1 and the rules promulgated thereunder by the United States Securities and Exchange Commission; and

(F) A person and any trust for which the person serves as trustee.

(2) “Control” means the power directly or indirectly to direct the management or policies of a financial institution or to vote 25 percent or more of any class of voting securities of a financial institution.

(3) “Person” means an individual or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, or any other form of entity not specifically listed in this paragraph.

(4) “Presumption of control” means a person which directly or indirectly owns, controls, or has the power to vote more than 10 percent but less than 25 percent of any class of voting securities of a financial institution if no other persons will own, control, or hold the power to vote a greater percentage of that class of voting securities immediately after the transaction.

1 15 U.S.C.A. §§ 78m and 78n.

§ 7-1-231

(a) For purposes of this Code section, the term “financial institution” shall include any “bank holding company” as such term is defined in subsection (a) of Code Section 7-1-605.

(b) It shall be unlawful for a person, acting directly or indirectly or through concert with one or more persons, to acquire control or the presumption of control of any financial institution through a purchase, assignment, pledge, or other disposition of voting stock of such institution, except with the approval of the department or as otherwise permitted by this part.

§ 7-1-232

(a) For purposes of this Code section, the term “financial institution” shall include any “bank holding company” as that term is defined in subsection (a) of Code Section 7-1-605.

(b) The department shall be given at least 60 days' prior written notice of any such proposed acquisition. The department may extend the period during which a disapproval may issue for another 30 days. The period for disapproval may be further extended only if the department determines that any acquiring party has not furnished all the information required under Code Section 7-1-233 or that in its judgment any material information submitted is substantially inaccurate. An acquisition may be made prior to expiration of the disapproval period if the department issues written notice of its intent not to disapprove the action.

(c) Within three days after its decision to disapprove any proposed acquisition, the department shall notify the acquiring party in writing of the disapproval. Such notice shall provide a statement of the basis for the disapproval.

(d) Within ten days of receipt of such notice of disapproval, the acquiring party may request a hearing on the proposed acquisition. At the conclusion thereof, the department shall by order approve or disapprove the proposed acquisition on the basis of the record made at such hearing.

(e) Any person whose proposed acquisition is disapproved after a department hearing under this Code section may obtain review in accordance with Code Section 7-1-90.

§ 7-1-233

Except as otherwise provided by regulation of the department, a notice filed pursuant to Code Section 7-1-232 shall contain the following information:

(1) The identity, personal history, business background, and experience of each person by whom or on whose behalf the acquisition is to be made, including his material business activities and affiliations during the past five years and a description of any material pending legal or administrative proceedings in which he is a party and any criminal indictment or conviction of such person by a state or federal court;

(2) A statement of the assets and liabilities of each person by whom or on whose behalf the acquisition is to be made, as of the end of the fiscal year for each of the five fiscal years immediately preceding the date of the notice, together with related statements of income and source and application of funds for each of the fiscal years then concluded, all prepared in accordance with generally accepted accounting principles consistently applied, and an interim statement of the assets and liabilities for each such person, together with related statements of income and source and application of funds, as of a date not more than 90 days prior to the date of the filing of the notice;

(3) The terms and conditions of the proposed acquisition and the manner in which the acquisition is to be made;

(4) The identity, source, and amount of the funds or other considerations used or to be used in making the acquisition and, if any part of these funds or other considerations has been or is to be borrowed or otherwise obtained for the purpose of making the acquisition, a description of the transaction, the names of the parties, and any arrangements, agreements, or understandings with such persons;

(5) Any plans or proposals which any acquiring party making the acquisition may have to liquidate the financial institution, to sell its assets or merge it with any company, or to make any other major change in its business or corporate structure or management;

(6) The identification of any person employed, retained, or to be compensated by the acquiring party or by any person on his behalf to make solicitations or recommendations to stockholders for the purpose of assisting in the acquisition and a brief description of the terms of such employment, retainer, or arrangement for compensation;

(7) Copies of all invitations or tenders or advertisements making a tender offer to stockholders for purchase of their stock to be used in connection with the proposed acquisition; and

(8) Any additional relevant information in such forms as the department may require by regulation or by specific request in connection with any particular notice.

§ 7-1-234

The department may disapprove any proposed acquisition if:

(1) The proposed acquisition of control would result in a monopoly or would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking in any part of this state;

(2) The effect of the proposed acquisition of control in any section of this state may be substantially to lessen competition or to tend to create a monopoly or the proposed acquisition of control would in any other manner be in restraint of trade and the anticompetitive effects of the proposed acquisition of control are not clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served;

(3) The financial condition of any acquiring person is such as might jeopardize the financial stability of the financial institution or prejudice the interests of the depositors of the financial institution;

(4) The competence, experience, or integrity of any acquiring person or of any of the proposed management personnel indicates that it would not be in the interest of the depositors of the financial institution or in the interest of the public to permit such person to control the financial institution;

(5) Any acquiring person neglects, fails, or refuses to furnish the department all the information required by it;

(6) In the case of trust companies, any individual who exercises control of a person that submits an application for approval under Code Section 7-1-232 has unsatisfactory results from a fingerprint record check report conducted by the Georgia Crime Information Center and the Federal Bureau of Investigation. The department shall be authorized to obtain conviction data with respect to any individual who exercises control of a person that submits an application for approval under Code Section 7-1-232, and such individual shall provide express written consent to the department to conduct a criminal background check and to use all information necessary to run such check, including, but not limited to, a classifiable set of fingerprints. The individual who exercises control of a person that submits an application for approval pursuant to Code Section 7-1-232 shall be responsible for all fees associated with the performance of such criminal background check. Upon receipt of fingerprints, fees, and other required information, the Georgia Crime Information Center shall transmit the necessary information to the Federal Bureau of Investigation for a search of its records; or

(7) In the case of trust companies, any acquiring person or an individual who is a director or officer of such person has failed to demonstrate financial responsibility, character, and general fitness. The department shall be authorized to obtain personal history and work experience and other information, including, but not limited to, independent credit reports obtained from a consumer reporting agency described in the federal Fair Credit Reporting Act, 15 U.S.C. Section 1681a(f) with respect to such acquiring person and an individual who is a director or officer of such person.

§ 7-1-235

This part shall not apply to a transaction subject to Code Sections 7-1-605 through 7-1-608, relating to bank holding companies.

§ 7-1-236

Whenever a change occurs in the ownership of or right to vote the outstanding shares of any bank or trust company which will result in the control or a change in the control of the bank or trust company, the president or other officer of such bank or trust company shall, within ten days after knowledge thereof, report such facts to the department. Notwithstanding Code Section 7-1-230, as used in this Code section, the term “control” means the power to direct or cause, directly or indirectly, the direction of the management or policies of the institution. If there is any doubt as to whether a change in the ownership or voting rights of such shares is sufficient to result in control thereof or to effect a change in the control thereof, such doubt shall be resolved in favor of reporting the facts to the department.

§ 7-1-237

Any financial institution shall be reimbursed by the requesting party for costs which are reasonably necessary and which have been directly incurred in searching for, reproducing, or transporting books, papers, records, or other data of a customer required or requested to be produced pursuant to a lawful subpoena, summons, warrant, garnishment, attachment, request for the production of documents, or court order where the financial institution is not a party to the action. Except as may otherwise be ordered by a judge of the court issuing the same, a financial institution shall have five business days from service of a subpoena within which to produce any books, papers, or records ordered produced pursuant to such subpoena. In the case of a garnishment or attachment of funds held by the financial institution, such reimbursement may be deducted prior to remission of such funds in response to the garnishment or attachment. Rates and conditions under which reimbursement may be made under this Code section shall be prescribed by regulations of the department.

§ 7-1-239

(a) As used in this Code section, the term:

(1) “Affidavit of the provider” means the form provided for in subsection (e) of this Code section.

(2) “Financial institution” means any federally chartered financial institution or state chartered financial institution, including, but not limited to, those chartered by states other than the State of Georgia whose deposits are federally insured.

(b) Except as provided in subsection (c) of this Code section and in Article 8 of this chapter, whenever any person dies intestate having a deposit of not more than $15,000.00 in a financial institution, such financial institution, upon receipt of an affidavit, shall be authorized to pay the proceeds of such deposit directly to the following individuals:

(1) To the surviving spouse;

(2) If no surviving spouse, to the children pro rata;

(3) If no children or surviving spouse, to the father and mother pro rata; or

(4) If none of the above, then to the brothers and sisters of the decedent pro rata.

Such affidavit shall state that such individuals qualify as the proper relation to the decedent as specified in this subsection, there is no known will of the decedent, and that there are no other known corresponding claimants to such deposit.

(c) Except as provided in Article 8 of this chapter and in paragraph (2) of subsection (d) of this Code section, if no application for the deposit is made by any person named in subsection (b) of this Code section within 45 days from the death of the intestate depositor, the financial institution shall be authorized to apply not more than $15,000.00 of the deposit of such deceased depositor in payment of the funeral expenses and expenses of the last illness of such deceased depositor upon the receipt of itemized statements of such expenses and the affidavit of the providers of such services that the itemized statements are true and correct and have not been paid. Except as otherwise provided in paragraph (2) of subsection (d) of this Code section, the financial institution applying such deposit as authorized in this subsection shall pay such expenses in the order received after the death of the depositor.

(d)(1) Except as otherwise provided in paragraph (2) of this subsection, payments made in compliance with this Code section shall operate as a complete acquittal and discharge to the financial institution of liability from any suit, claim, or demand of whatever nature by any heir, distributee, or creditor of the decedent, or any other person. Except as otherwise provided in paragraph (2) of this subsection, the financial institution may rely on a properly executed affidavit in disbursing the funds in accordance with this Code section.

(2) The protection provided by paragraph (1) of this subsection does not extend to payments made after a financial institution has received:

(A) Written notification sent by any party able to request present payment or the legal representative of any such party to the registered agent of the financial institution by registered or certified mail, return receipt requested, or statutory overnight delivery, expressly stating that payments in accordance with the provisions of this Code section should not be permitted; or

(B) Service of notice upon the registered agent of the financial institution of a proceeding in the probate court in the estate of the deceased depositor in accordance with Chapter 11 of Title 53;

provided, however, that, if any payment is made pursuant to subsection (c) of this Code section by an employee of the financial institution who is without actual knowledge of such written notification or service of notice within three business days following the receipt of such written notification or service of notice by the registered agent of the financial institution, the protection provided by paragraph (1) of this subsection shall extend to any such payment.

(3) A financial institution that is asked to apply funds from the deposit of a deceased depositor as requested in an affidavit of the provider may, without risk of incurring any penalty or liability to any person:

(A) Rely on the written notification or service of notice provided by paragraph (2) of this subsection in refusing to disburse the funds as requested in the affidavit of the provider;

(B) Delay disbursement of the funds as requested in the affidavit of the provider for up to 180 days following the receipt by the financial institution of such affidavit of the provider; and

(C) Decline to disburse funds from the deposit of the deceased depositor except as authorized or directed in an order entered by the probate court having jurisdiction over the estate of the deceased depositor.

(4) Notwithstanding subsection (c) of this Code section or any other provision of this subsection, payments made pursuant to an order entered by the probate court having jurisdiction over the estate of a deceased depositor shall operate as a complete acquittal and discharge to the financial institution of liability from any suit, claim, or demand of whatever nature by any heir, distributee, or creditor of the decedent, or any other person.

(5) Nothing in this subsection shall relieve the liability of or limit the availability of any remedies against any provider of services giving an affidavit in the form provided for in subsection (e) of this Code section for any violation of Code Section 16-10-71, Code Section 53-6-2, or other applicable law.

(e) A document substantially in the following form shall be used as the affidavit of the providers of services of funeral expenses and expenses of last illnesses of deceased depositors:

“State of Georgia County of ________________

STATUTORY AFFIDAVIT FORM

_________________________________________	from ___________________________________	attests that
(Claimant)	(Facility)
_________________________________________	died on the ______ day of ___________________	, 20 ________.
(Deceased)
On information and belief, the Deceased has funds on deposit with_______________________________.
(Financial Institution)

Under O.C.G.A. § 7-1-239, such Financial Institution is authorized to pay the proceeds of the Deceased's deposits, but in no event more than $15,000.00, directly to the following persons identified, collectively, as potential recipient(s):

To the surviving spouse;
If no surviving spouse, to the children pro rata;
If no children or surviving spouse, to the father and mother pro rata; or
If none of the above, then to the brothers and sisters of the decedent pro rata.

Except as provided for by Article 8 in Title 7 of the O.C.G.A., if no request for the Deceased's deposit is made by a potential recipient(s) within 45 days from the Deceased's death, the Financial Institution is authorized to release up to $15,000.00 for funeral expenses and expenses of the last illness of the Deceased upon the receipt of itemized statements of such expenses and this executed attestation.

The Claimant attests that there is no known will of the Deceased and there is no known potential recipient of the Deceased's deposits. The Claimant also attests that funeral expenses or expenses of the last illness in the amount of $ ___ were incurred related to the Deceased and that true and correct copies of the itemized receipts fully supporting such amount are attached to this affidavit. Finally, the Claimant further attests that such expenses have not been paid as of the date of execution of this affidavit.

Pursuant to O.C.G.A. § 7-1-239, the Claimant submits this form in order to receive payment in the amount of $__________ (shall not exceed $15,000.00) for outstanding funeral expenses or expenses of the last illness of the Deceased.

	_________________________________________________
	Signature of Claimant

Sworn and subscribed

before me this ______ day

of ____________, 20.

_________________________________________________
Notary public (SEAL)

My commission expires: _______________”

§ 7-1-239.1

(a) Whenever any person dies intestate having possession of or a right to possession of a check or other instrument payable to such deceased person and the amount of the check or instrument does not exceed $15,000.00, the financial institution on which the check or instrument is drawn shall be authorized to accept and redeem the check or instrument by payment to the following persons:

(1) To the surviving spouse;

(2) If no surviving spouse, to the children pro rata;

(3) If no children or surviving spouse, to the father and mother pro rata; or

(4) If none of the above, then to the brothers and sisters of the decedent pro rata.

(b) If a check or other instrument is payable to more than one person, it may be accepted and redeemed as provided in subsection (a) of this Code section only if it has been endorsed by each payee other than the decedent.

(c) Payments made pursuant to this Code section shall operate as a complete acquittal and discharge to the financial institution of liability from any suit, claim, or demand of whatever nature by any heir, distributee, creditor of the decedent, or any other person. Such payment is authorized to be made as provided in this Code section without the necessity of administration of the estate of the decedent and without the necessity of obtaining an order that no administration is necessary.

(d) As used in this Code section, the term “financial institution” includes any federally chartered financial institution.

(e) Application by any claimant or claimants entitled in this Code section to receive payments of checks or other instruments at a financial institution upon which such instrument is drawn shall include an affidavit by the claimant or claimants which states that they qualify as the proper relation to the decedent as specified in this Code section and that the claimant or claimants know of no other corresponding claimant or claimants to such funds. The financial institution may rely on a properly executed affidavit in disbursing the funds according to this Code section.

§ 7-1-239.6

A financial institution or mortgage lender, as such term is defined by Code Section 7-1-1000, may charge a convenience fee provided that such fee is permissible in accordance with Code Section 13-1-15. For purposes of this Code section, the term “convenience fee” means any additional amount imposed to a consumer at the time of a transaction for the election of making a payment by electronic means. A convenience fee may include, but is not limited to, any fee charged for payment to an account with the assistance of a live representative or agent of the financial institution or mortgage lender, by telephone, using a voice response unit, or other electronic means. A convenience fee does not include a discount offered by a lender or merchant to a person for payment by cash, check, or similar means.

§ 7-1-239.10

(a) As used in this Code section, the term:

(1) “Bank” means a national bank or a state chartered bank, regardless of which state issued the charter, that has federal deposit insurance.

(2) “Credit union” means a federally chartered credit union or a state chartered credit union, regardless of which state issued the charter, that has federal deposit insurance.

(3) “Savings promotion raffle” means a contest in which the sole consideration required for a chance of winning a designated prize is obtained by the deposit of a specified amount of money in a savings account or other savings program offered by a bank or credit union, where each ticket or entry has an equal chance of being drawn.

(b) A bank or credit union may conduct a savings promotion raffle, provided that the raffle is conducted in a manner that does not:

(1) Jeopardize the ability of the bank or credit union conducting the savings promotion raffle to operate in a safe and sound manner; or

(2) Mislead depositors about the chances of winning.

(1) Shall provide each person making a deposit in a savings promotion raffle account with information regarding:

(A) The terms of the raffle;

(B) The verifiable retail value of each prize that a depositor has a chance of winning;

(D) Any fees or penalties associated with such account;

(2) Shall not charge any fees associated with the underlying savings account or other savings program in excess of the fees charged for the savings account or other savings program offered by the bank or credit union that is the most similar to such savings promotion raffle account;

(3) May contract for and use the services of a third-party service provider to handle the administrative details of conducting a savings promotion raffle; and

(4) Shall maintain all records the department determines are necessary to conduct an examination or audit of a savings promotion raffle.

(d) The provisions of this Code section applicable to credit unions shall apply to an organization composed primarily of credit unions and the provisions of this Code section applicable to banks shall apply to an organization composed primarily of banks.

§ 7-1-240

Any financial institution authorized by law to act as both a bank and a trust company shall enjoy and be subject to the powers and restrictions of a bank of its type in regard to its banking activities and in like manner shall enjoy and be subject to the powers and restrictions of a trust company in regard to its trust activity. With respect to general corporate matters not identified with either banking or trust functions, it shall have the privileges and restrictions of a bank of its type.

§ 7-1-241

(a) No person or corporation may lawfully engage in this state in the business of banking or receiving money for deposit or transmission or lawfully establish in this state a place of business for such purpose, except a bank, a national bank, a credit union to the extent provided in Article 3 of this chapter, a licensee engaged in money transmission to the extent permitted by Article 4 of this chapter, a foreign bank branch or foreign bank agency to the extent provided in Article 14 of this chapter, or a savings and loan association to the extent provided by the laws of the United States.

(b) None of the following shall be deemed to be engaged in the business of receiving money for deposit or transmission within the meaning of subsection (a) of this Code section:

(1) A club or hotel to the extent it receives money from members or guests for temporary safekeeping;

(2) An express, steamship, or telegraph company to the extent it receives money for transmission;

(3) An attorney at law, real estate agent, fiscal agent, insurance company, utility company, or any other person or corporation to the extent he or she or it receives and transmits money solely as an incident to a business or profession not governed by this chapter;

(4) Persons or corporations engaged in the business of cashing checks, dispensing cash through credit or debit card activated electronic devices, or recording of financial transactions resulting from and initiated at the point of the sale of goods or services; provided, however, that no such person or corporation shall receive deposits except as provided in Code Section 7-1-603 or otherwise engage in the business of banking; or

(5) A securities broker or dealer registered pursuant to the provisions of 15 U.S.C. Section 78o or Chapter 5 of Title 10 to the extent that such securities broker or dealer:

(A) Sells certificates of deposit or interest in certificates of deposit or other deposit instruments issued by a bank or savings association, provided such securities broker or dealer fully and fairly discloses at the time of solicitation and confirmation whether or not federal deposit insurance is available for that deposit instrument;

(B) Purchases certificates of deposit or other deposit instruments issued by a bank or savings association for the account of the customer of such securities broker or dealer, provided that such instruments are registered in the name of the customer or the custodian of such customer on the books or other records of the issuing bank or savings association; or

(c) The department is authorized to promulgate regulations and establish policy, consistent with the objectives of this chapter, which objectives include for the purposes of this Code section providing for appropriate competition between financial institutions and other financial organizations and protection of the interests of depositors, and to further define, restrict, or require registration of entities which provide financial products and services to the citizens of this state via the Internet, other online access to financial products and services, or alternate methods of delivery which differ from geographically based banking.

§ 7-1-242

(a) No corporation, partnership, or other entity may lawfully act as a fiduciary in this state except:

(1) A financial institution authorized to act in such capacity pursuant to the provisions of Georgia law;

(2) A trust company;

(3) A national bank or a state bank lawfully doing a banking business in this state and authorized to act as a fiduciary under the laws of the United States or another state;

(4) A savings bank or savings and loan association lawfully doing a banking business in this state and authorized to act as a fiduciary under the laws of the United States or another state;

(5) Attorneys at law licensed to practice in this state, whether organized as a professional corporation or otherwise;

(6) An investment adviser registered pursuant to the provisions of 15 U.S.C. Section 80b-3 or Chapter 5 of Title 10, provided that this exception shall not authorize an investment adviser to act in any fiduciary capacity subject to the provisions of Title 53, relating to wills, trusts, and the administration of estates, or Title 29, relating to guardianships and conservatorships;

(7) A securities broker or dealer registered pursuant to the provisions of 15 U.S.C. Section 78o or Chapter 5 of Title 10 acting in such fiduciary capacity incidental to and as a consequence of its broker or dealer activities; or

(8) A nonprofit corporation.

(b) Acting as a fiduciary for purposes of this Code section includes but is not limited to:

(1) Accepting or executing trusts or otherwise acting as a trustee;

(2) Administering real or tangible personal property located in Georgia or elsewhere. For the purposes of this paragraph, “administer” means to possess, purchase, sell, lease, insure, safekeep, manage, or otherwise oversee; and

(3) Acting pursuant to a court order as personal representative, executor, or administrator of the estate of a deceased person or as guardian or conservator for a minor or incapacitated person.

(c) Nothing in this chapter shall be construed to repeal or to change Article 15 of Chapter 12 of Title 53 or any other statutes or rules of law on such subject.

§ 7-1-243

(a) Except as provided in subsection (c) of this Code section, no person or corporation except a bank, a national bank, a foreign bank as defined in Code Section 7-1-1100, a bank as defined in Code Section 7-1-628.1, a corporation lawfully owning the majority of the voting stock of a bank, a national bank, or a bank as defined in Code Section 7-1-628.1, or a subsidiary of such bank, national bank, bank as defined in Code Section 7-1-628.1, or corporation shall use the words “bank,” “banker,” “banking company,” “banking house,” or any other similar name indicating that the business done is that of a bank upon any sign at its place of business or elsewhere, or upon any of its letterheads, billheads, blank checks, blank notes, receipts, certificates, circulars, advertisements, or any other written or printed matter.

(a.1) Except as provided in subsection (c) of this Code section, no person or corporation except a credit union, a federal credit union, or credit union chartered by another state whose deposits are federally insured, or a subsidiary of such credit union, federal credit union, or credit union chartered by another state whose deposits are federally insured shall use the words “credit union,” or any other similar name indicating that the business done is that of a credit union upon any sign at its place of business or elsewhere, or upon any of its letterheads, billheads, blank checks, blank notes, receipts, certificates, circulars, advertisements, or any other written or printed matter.

(b) Except as provided in subsection (c) of this Code section, no person or corporation except:

(1) A corporation lawfully authorized to exercise trust powers or any subsidiary thereof;

(2) A corporation lawfully owning the majority of the voting stock of any corporation authorized to exercise trust powers, or any subsidiary of such owner corporation;

(3) An enterprise whose structure is in the nature of a trust where the trustees include a corporation lawfully authorized to exercise trust powers in this state;

(4) An eleemosynary institution; or

(5) A foreign bank as defined in Code Section 7-1-1100 shall use the words “trust” or “trust company” or any similar name indicating that the business done is that of a trust company upon any sign at its place of business or elsewhere, or upon any of its letterheads, billheads, blank checks, blank notes, receipts, certificates, circulars, advertisements, or any other written or printed matter.

(1) Prevent the use of the words “banks,” “banker,” “banking,” “banker’s,” “trust,” or any similar word in a context clearly not purporting to refer to a banking or a trust business or to a business primarily engaged in the lending of money, underwriting or sale of securities, acting as a financial planner, financial service provider, investment or trust adviser, or acting as a loan broker;

(1.1) Prevent the use of the words “credit union,” or any similar word in a context clearly not purporting to refer to a credit union or to a business primarily engaged in the lending of money, or accepting shares or deposits or acting as a loan broker;

(2) Prohibit advertisement in media distributed in or transmitted into this state by persons or corporations lawfully engaged in the banking, credit union, or trust business outside of this state; or

(3) Prevent any person or corporation from continuing to use its name legally in use on April 1, 1989.

(d) The department shall advise the Secretary of State of any corporate name or proposed corporate name it deems to be inconsistent with this Code section.

§ 7-1-244

(a) Every bank shall obtain and maintain deposit insurance satisfactory to the department; provided, however, that banks which have had their deposit insurance withdrawn or canceled may, in the discretion of the department, continue to accept deposits; provided, further, that such banks shall within six months after such withdrawal or cancellation of insurance obtain deposit insurance, satisfactory to the department, written by an insurance company authorized to transact business in this state or by the Federal Deposit Insurance Corporation. The department may, in its discretion, for cause shown, extend the time limitation in which deposit insurance must be obtained.

(b) Deposit insurance required to be obtained in subsection (a) of this Code section need not be in excess of amounts insured by the Federal Deposit Insurance Corporation at the time the insurance is obtained; but wherever the insurance coverage is, in the opinion of the department, less than amounts insured by the Federal Deposit Insurance Corporation, the bank shall be required to post at a conspicuous place near the entrance of such bank a sign in boldface print, in letters at least four inches high, which states “Deposits Not Insured” or “Deposits Insured Up To (insert amount of deposit insurance).” Such wording shall also follow the name of the bank wherever it is written or printed and shall be posted in writing which is easily legible in letters at least one inch high at each window or desk receiving deposits.

§ 7-1-260

Subject to restrictions contained in this chapter or in its articles, a bank or trust company shall have the power:

(1) To have perpetual duration unless a limited period of duration is stated in its articles. Each bank or trust company existing on April 1, 1975, shall have perpetual duration unless its articles are amended under this chapter to provide for a limited period of duration;

(2) To sue and be sued, complain and defend in its corporate name;

(3) To have a corporate seal, which may be altered at pleasure, and to use the same by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced;

(4) To adopt, alter, and repeal bylaws pursuant to the procedures of Code Section 7-1-481 containing provisions for the regulation and management of affairs of the institution not inconsistent with law or its articles;

(5) To elect or appoint and remove officers and agents of the institution and to define their duties and fix their compensation;

(6) To make contracts;

(7) To make, irrespective of corporate benefit, loans, investments, contributions, and donations for community development and the promotion of the public welfare or for other religious, charitable, scientific, educational, hospital, civic, or similar purposes and in time of war or other national emergency in aid of the national effort with respect thereto;

(8) At the request or direction of the United States government or any public body thereof, to transact lawful business in time of war or national emergency in aid of the national effort in connection therewith;

(9) To procure, for its benefit, insurance on the life of any of its directors, officers, or employees or any other person whose death might cause financial loss to the bank or trust company; or, pursuant to any contract lawfully obligating the bank or trust company as guarantor or surety, on the life of the principal obligor; and

(10) To reimburse and indemnify litigation, liabilities, and expenses of directors, officers, and employees pursuant to agreements with them or otherwise and to purchase and maintain liability insurance for their benefit unless otherwise limited pursuant to this chapter.

§ 7-1-261

Banks and trust companies shall, in addition, have the power:

(1) To act as agent of the United States or any public body thereof for the sale or issue of bonds, notes, or other obligations of the United States, or those for which the full faith and credit of the United States is pledged, and to grant security interests in its assets for the faithful performance of its duties as agent;

(2) To receive for safekeeping or to rent out receptacles or safe-deposit boxes for the deposit of papers and other personal property;

(3) To grant security interests in their assets for borrowings authorized by this chapter and to dispose of their assets in the same manner as corporations generally;

(4) To give bond in any proceeding in any court in which they are a party or upon any appeal in any such proceeding and to secure such bond;

(5) To acquire and hold real property to the extent permitted by Code Sections 7-1-262, 7-1-282, and 7-1-286;

(6) To acquire and hold stocks and investment securities subject, in the case of banks, to the restrictions of Code Sections 7-1-287 and 7-1-288 and, in the case of trust institutions, to the restrictions of Code Section 7-1-312;

(7) To acquire and hold personal property necessary in the exercise of powers conferred by this chapter;

(8) To acquire and hold any property in order to avoid loss on an evidence of indebtedness, agreement for the payment of money, or an investment security previously acquired lawfully and in good faith subject to the restrictions of Code Section 7-1-263;

(9) To hold property lawfully held on April 1, 1975, irrespective of any restriction or limitation in this chapter, subject to the inclusion of any such property in any computation of limitation on the acquisition of property of like character under this chapter;

(10) To enter into an agency relationship as defined in Code Section 7-1-4 subject to restrictions and qualifications prescribed by regulations of the department; and

(11) To have and exercise all powers necessary, convenient, or incidental to effect any and all purposes for which the bank or trust company and its subsidiaries and affiliates is organized, provided that the commissioner may establish approval procedures by regulation for additional powers as needed to satisfy the objectives of this chapter. Powers shall include but not be limited to: sale of securities, annuities, and other investment products upon the order of and for the account of its customers, subject to applicable federal or state securities requirements; sale of insurance subject to state insurance laws, regulations, and licensing requirements, applicable federal laws, and departmental regulations and policies; sale or lease of excess computer capacity; expansion of customer services through the use of technology; other powers including those bank and trust powers authorized to subsidiaries of the bank or trust company pursuant to subparagraph (c)(2)(F) of Code Section 7-1-288; and other such powers to carry on banking, trust, or other activities determined by the commissioner to be financial in nature or incident or complementary to such financial activities and consistent with the objectives of this chapter and the regulations of the department.

§ 7-1-262

(a) A bank or trust company may solely or jointly with other persons or corporations acquire and hold such real property as it:

(1) Occupies or intends to occupy primarily for the transaction of its business, the business of any subsidiary or affiliate, or the recreational use of its employees or partly so occupies and partly leases;

(2) Acquires for the purpose of providing parking or other facilities primarily for the use of its tenants, customers, officers, and employees; or

(3) Acquires with others for the purpose of providing data processing facilities or other support services for the bank or trust company or any subsidiary solely or in cooperation with others,

subject to the limitation that the investment of the bank or trust company in all such real property, in all furniture, fixtures, and equipment acquired in connection with any real property owned or leased by the bank or trust company, in all alterations of buildings on real property owned or leased by the bank or trust company, in all shares of corporations organized for the purpose of holding real estate in the categories described above where the bank or trust company or a subsidiary of the bank or trust company owns 25 percent or more of such shares outstanding, in obligations of or for the benefit of such corporations or loans upon the security of the shares of such corporations or, to the extent of the bank's or trust company's pro rata interest, the security of the real estate itself, and in all real estate, furniture, fixtures, or equipment held beyond the limits specified in Code Section 7-1-263 shall not exceed 60 percent of the statutory capital base of the bank or trust company, or such larger amount as may be approved by the department.

(b) All acquisitions of real property for purposes authorized above must be accorded prior written approval by the department in advance of the acquisition except to the extent authorized by regulation.

§ 7-1-263

A bank or trust company may acquire and hold property for the purpose of avoiding loss as specified in paragraph (8) of Code Section 7-1-261, subject to:

(1) A determination by a majority vote of its directors at least once each year as to the advisability of retaining any such property, provided that no such property may be held for more than five years without the prior written approval of the department; and

(2) Disposition within a period of six months after the date of acquisition or such longer period as the department may approve in writing of shares of its own stock so acquired and of shares of stock of any bank, bank holding company, or trust company held after such acquisition.

§ 7-1-280

Subject to restrictions contained in this chapter or in its articles, a bank shall have the power:

(1) To receive money or commercial paper for deposit and to provide by its rules or by agreement for the terms of withdrawal and interest thereon;

(2) To act as an agent to collect checks, drafts, and other items of commercial paper and in exercising this power to become a member of a clearing-house and grant security interests in its assets for its qualification therein;

(3) To lend money and discount or purchase evidence of indebtedness and agreements for the payment of money and to take security title or security interests in real or personal property to secure obligations owing thereunder;

(4) To service loans made by it or by others whether or not held by the bank;

(5) To issue, advise, and confirm letters of credit authorizing the beneficiaries thereof to draw upon the bank or its correspondents;

(6) To receive money for transmission;

(7) To buy and sell exchange, coin, and bullion; and

(8) To provide third-party payments services.

§ 7-1-281

Any bank may:

(1) Become a member of the Federal Reserve System and conform to the rules and regulations of that system and the federal reserve bank of which it is a member;

(2) Become an insured bank pursuant to the Federal Deposit Insurance Act 1 and take all action necessary to the maintenance of insured status thereunder;

(3) Apply for and obtain insurance on loans pursuant to national housing legislation.

1 12 U.S.C.A. § 1811 et seq.

§ 7-1-282

Notwithstanding any other provision of law to the contrary and subject to such regulations as the department may prescribe, a bank may:

(1) Become the owner and lessor of personal property acquired upon the specific request and for the use of a customer and may incur such additional obligations as may be incident to becoming an owner and lessor of such property. At the end of any lease, the bank shall, within six months, enter into a new lease with respect to the property or dispose of it. The leasing shall constitute an indebtedness under Code Section 7-1-285 and shall be subject to the lending limitations of such Code section;

(2) Become the owner and lessor of certain public real property and facilities. A bank may purchase or construct a municipal building, school building, or other similar state, local, or other governmental authority facility if, as holder of legal title, such purchase is for the purpose of leasing the facility to a municipality or other public or governmental authority which has the authority to enter into such lease, is authorized to levy taxes or is backed by the taxing authority of another political subdivision, and has the resources sufficient to make lease payments as they come due. The lease agreement must provide that the lessee will become the owner of the building or facility upon the expiration of the lease; and

(3) Become the owner and lessor of real property acquired upon the specific request and for the use of a customer or an affiliate thereof and may incur such additional obligations as may be incidental to becoming an owner and lessor of such property. The lessee, or an affiliate thereof, shall be responsible for any and all construction of buildings or other improvements related to such real property. Any lease with respect to such real property shall provide that the lessee thereof shall be responsible for maintaining the property, insuring the property, and paying real estate taxes related to the property. At the end of any lease, the bank shall, within six months, enter into a new lease with respect to the property or dispose of it. The leasing shall be subject to credit approval by the bank in a manner substantially similar to a loan and shall constitute an indebtedness under Code Section 7-1-285 and shall be subject to the lending limitations of such Code section. The assignment of any purchase contract, or the right to purchase real property thereunder, by the lessee or an affiliate thereof to the bank shall not affect the entitlement of any real estate broker to any real estate brokerage commissions owing upon the sale of such real property.

§ 7-1-283

(a) A bank may purchase and may sell participations in:

(1) One or more evidences of indebtedness or agreements for the payment of money, subject to regulations by the department; or

(2) Pools of evidences of indebtedness or agreements for the payment of money, subject to regulations by the department.

(b) The department may prohibit the sale of any type of participation to the public or otherwise not in the usual course of banking business, except as permitted by other provisions of this chapter.

§ 7-1-284

(a) A bank may accept drafts upon it having not more than nine months' sight to run arising out of transactions involving:

(1) The import or export of goods;

(2) The domestic shipment of goods, if secured by documents of title covering such goods; or

(3) The storage of readily marketable staples, if secured by documents of title covering such staples.

(b) The aggregate amount of acceptances under subsection (a) of this Code section shall not at any time exceed, for all such acceptances on behalf of one customer, 15 percent of the statutory capital base of the bank, exclusive of any acceptance secured by documents of title or other security growing out of the same transaction as the acceptance.

(c) In addition, a bank may, with the prior approval of the department, accept drafts having not more than three months' sight to run drawn upon it by banking institutions or bankers in foreign countries or in dependencies or insular possessions of the United States for the purpose of creating dollar exchange as required in an aggregate amount which shall not at any time exceed:

(1) For all such acceptances on behalf of a single banking institution or banker, 10 percent of the statutory capital base;

(2) For all such acceptances, 50 percent of the statutory capital base, provided that the department may, by regulation, impose additional restrictions on the acceptance of drafts under this subsection.

§ 7-1-285

(a) As used in this Code section, the term:

(1) “Credit exposure as a counterparty in derivative transactions” means an amount that the bank reasonably determines, pursuant to a methodology acceptable to the department under the terms of the derivative or otherwise, would be its loss if a counterparty were to default on the date of determination, taking into account any netting and collateral arrangements and any guarantees or other credit enhancements; provided, however, that the bank may elect to determine credit exposure on the basis of such other method of determining credit exposure as may be permitted by the department and the bank's primary federal regulator.

(2) “Derivative transaction” includes any transaction that is an agreement, contract, note, option, swap, or warrant that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event relating to, one or more commodities, securities, currencies, interest or other rates, indices, or other assets.

(3) “Person or corporation” includes, but is not limited to, an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, or unincorporated organization. The term “person or corporation” shall not include the affiliates of a bank or a clearing organization registered or exempt from registration with the Commodity Futures Trading Commission, the Securities and Exchange Commission, any other federal agency, or any successor agencies.

(a.1) A bank shall not at any time:

(1) Make loans to any one person or corporation;

(2) Have obligations owing to it from any one person or corporation as a result of purchasing or discounting evidences of indebtedness or agreements for the payment of money; or

(3) Have credit exposure as a counterparty in derivative transactions with any one person or corporation,

where the aggregate of such loans, obligations, and credit exposure together exceeds 15 percent of the statutory capital base of the bank at the time of issuance of a binding commitment unless each loan, discount, purchase, or derivative transaction in excess of such 15 percent limit is approved in advance by the board of directors or a committee authorized to act for it subject to the provisions set forth in subsections (b) and (c) of this Code section. Approval by the board of directors or authorized committee shall be recorded in the formal minutes of the actions of the board or its committee by name of borrower, amount of loan, maturity of loan, general type of collateral, and such other information as required pursuant to the rules and regulations of the department. Any action required by this subsection may be taken pursuant to Code Section 7-1-483, provided that the minutes of the proceedings of the board or of the committee reflect such action and each director taking such action signs the minutes reflecting such action by no later than the next regular meeting of the board or committee attended by such director.

(b) Except as provided in subsection (c) of this Code section, a bank shall not directly or indirectly make loans, have obligations, or have credit exposure as a counterparty in derivative transactions to any one person or corporation which in aggregate exceed 15 percent of the statutory capital base of the bank at the time of issuance of a binding commitment unless the entire amount of such loans, obligations, and credit exposure in derivative transactions is secured by good collateral or other ample security and does not exceed 25 percent of the statutory capital base at the time of issuance of a binding commitment. Except as otherwise indicated in subsection (c) of this Code section, the purchase or discount of agreements for the payment of money or evidences of indebtedness shall be regarded as indirect loans to the person or corporation receiving the proceeds of such transactions. In estimating the legal lending limit for any one person or corporation, loans to related corporations, partnerships, and other entities shall be combined subject to regulations established by the department.

(1) Obligations of and obligations guaranteed by:

(A) The United States;

(B) The State of Georgia or a public body thereof authorized to levy taxes;

(C) Any state of the United States or any public body thereof if the obligations or guarantees are general obligations; or

(D) Any agency of this state as defined in subparagraph (a)(1)(A) of Code Section 50-14-1;

(2) Obligations to the extent secured by:

(A) Obligations specified in paragraph (3) of this subsection;

(B) Obligations which the bank would be authorized to acquire without limit as investment securities pursuant to Code Section 7-1-287;

(D) Guaranties or commitments or agreements to take over or purchase made by any public body of the United States or any corporation owned directly or indirectly by the United States; or

(E) Loan agreements between a local public agency or a public housing agency and an instrumentality of the United States pursuant to national housing legislation under which funds will be provided for payment of the obligations secured by such loan agreements;

(3) Obligations in the form of investment securities acquired pursuant to Code Section 7-1-287 and related regulations;

(4) Obligations with respect to the sale of federal or correspondent funds to financial institutions having their deposits insured to the same extent as that required of similar institutions chartered in this state; and

(5) A renewal or restructuring of a loan as a new loan or extension of credit following the exercise by the bank of reasonable efforts, consistent with safe and sound banking practices, to bring the loan into conformance with the lending limits of this Code section, unless:

(A) New funds are advanced by the bank to the borrower, except as permitted under this Code section;

(B) A new borrower replaces the original borrower; or

(C) The department determines that a renewal or restructuring was undertaken as a means to evade the bank's lending limit.

(d) In lieu of following the limitations contained in subsections (a) through (c) of this Code section and the related regulations of the department, a bank may petition the department for approval to utilize all of the limitations applicable to national banks regarding obligations of a single person or corporation.

(e) The department may, by regulation not inconsistent with this Code section, prescribe definitions of and requirements for transactions included in or excluded from the indebtedness to which this Code section applies. The department may also by regulation prescribe less restrictive limitations than those listed in subsections (a) through (c) of this Code section for banks meeting certain financial and management criteria. In addition, the department may, by regulation or otherwise, specify that the liabilities of a group of one or more persons or corporations or both shall be considered as owed by one person or corporation for the purposes of this Code section because the borrowers within the group are related through common control or the group meets other criteria established by the department for the combination of indebtedness for legal lending limitation purposes.

§ 7-1-286

(a) A bank shall make loans secured by improved or unimproved real estate (including a leasehold) subject to the provisions of Part 365 of the Federal Deposit Insurance Corporation's rules and regulations, including 12 C.F.R. 365.1 and 365.2 and the Interagency Guidelines for Real Estate Lending Policies in Appendix A and 12 C.F.R. 208.51 and the guidelines contained in 12 C.F.R. Part 208 in the case of Federal Reserve member banks. Such loans shall also be subject to the additional provisions and exceptions as set forth in the rules of the department.

(b) The limitations of subsection (a) of this Code section shall not apply to:

(1) An investment security acquired pursuant to Code Section 7-1-287;

(2) A loan in connection with which the bank takes a real estate lien as security in the exercise of banking prudence but as to which it is relying for repayment on:

(A) The general credit of the obligor or of an installment buyer or of a lessee of the real estate;

(B) Collateral other than the real estate lien;

(C) A guaranty or an agreement to take over or purchase the loan, in the event of default, by a financially responsible person other than a person engaged in the business of guaranteeing real estate loans; or

(D) An agreement by a financially responsible person to take over or purchase the loan, or to provide funds for payment thereof, within a period of two years from the date of the loan;

and there is documentation in the file setting forth the applicable facts to support reliance on this paragraph.

(c) For the purpose of this Code section, a “leasehold” shall mean the interest, which is security for a loan, of a lessee of real estate under a lease which on the date of the loan has an unexpired term extending at least ten years beyond the maturity of the loan or contains a right of renewal, which may be exercised by the bank, extending at least ten years beyond the maturity of the loan.

(d) Notwithstanding any other provisions of this chapter and otherwise subject to regulations of the department, a bank or trust company may acquire, directly or indirectly, an ownership interest in real estate incidental to the financing of the purchase, development, or improvement of such real estate, provided that:

(1) The amount of such ownership interest shall not exceed 25 percent of the appraised value of the real estate;

(2) The amount of such ownership interest when aggregated with the amount financed shall not exceed the limitations prescribed by this Code section and Code Section 7-1-285;

(3) The ownership interest shall be terminated upon substantial repayment of the financing in the manner prescribed in Code Section 7-1-263, relating to the divestiture of real estate interest; and

(4) Any time real estate owned by a bank or trust company pursuant to this subsection is held or disposed of pursuant to the provisions of Code Section 7-1-263, said action to hold or dispose shall be reported in writing annually to the stockholders. Said report shall include disclosure of any real estate acquired by foreclosure or the taking by a deed in lieu of foreclosure and the name or names of the corporation or individuals from whom title was taken.

§ 7-1-287

Notwithstanding the limitations of Code Section 7-1-288, a bank may purchase, sell, underwrite, and hold securities which are obligations in the form of bonds, notes, or debentures or mutual funds, investment trusts, or pools primarily consisting of such bonds, notes, or debentures, and may purchase, sell, and hold corporate debt obligations, to the extent authorized by regulations of the department. The department may issue regulations which prescribe operating restrictions and standards of conduct dealing with potential conflicts of interest and shall prescribe rules for divestiture of securities held in violation of such regulations and fines for violations not to exceed $10,000.00 per day during which each violation remains uncorrected. A bank may hold without limit securities which are obligations of the United States or obligations which are guaranteed fully as to principal and interest by the United States or general obligations of any state.

§ 7-1-288

(a) A bank may engage in any transaction with respect to shares of stock or other capital securities of any corporation in accordance with this Code section and in other instances as provided in state or federal law.

(b) A bank may:

(1) Engage in transactions with respect to issuance and transfer of shares of its own stock and capital securities and in other transactions with respect to such stock and capital securities authorized by this chapter;

(2) Purchase and sell shares of stock, bonds, capital securities, and other investment products upon the order of and for the account of a customer without recourse against it;

(3) Receive a pledge or other security interest in stock or capital securities in order to secure loans made in good faith, except that it may not receive such interests in its own stock or capital securities nor lend in one or more transactions, involving one or more borrowers, more than 30 percent of its statutory capital base on the stock or capital securities of any corporation (including therein loans made directly to the corporation without ample security but excluding obligations representing the sale of federal or correspondent funds to another financial institution). The department may, by regulation or otherwise, specify that two or more corporations are so interrelated that their stock shall be regarded as the stock of one corporation for the purposes of this subsection.

(1) Shares of stock of a federal reserve bank without limitation of amount;

(2) Shares of stock or interests in:

(A) Any state or federal government sponsored instrumentality for the guarantee, underwriting, or marketing of residential housing or financing of residential housing;

(B) A business development corporation or small minority business development corporation authorized under Article 6 of this chapter;

(C) An agricultural credit corporation duly organized under the laws of this state having authority to make loans to farmers of this state for agricultural purposes under programs administered by the federal farm credit system;

(D) A bank service corporation created to provide support services for one or more financial institutions;

(E)(i) A bank principally engaged in foreign or international banking or banking in a dependency or insular possession of the United States, either directly or through the agency, ownership, or control of local institutions in foreign countries or in such dependencies or insular possessions, including the stock of one or more corporations existing pursuant to Section 25(a) of the Federal Reserve Act, 1 provided that, before a bank may purchase a majority interest in any such banking institution, it shall enter into an agreement with the department to restrict its operations in such manner as the department may prescribe; and provided, further, that, if the department determines that said restrictions have not been complied with, it may order the disposition of said stock upon reasonable notice.

(ii) A bank engaged in providing banking or other financial services to depository financial institutions, which bank's ownership consists primarily of such depository financial institutions;

(F) A corporation or limited liability company engaged in functions or activities that the bank or trust company is authorized to carry on, including, but not limited to: conducting a safe-deposit business; holding real estate; acting as a financial planner or investment adviser; offering of a full range of investment products; promoting and facilitating international trade and commerce; and exercising powers incidental to financial activities as provided in paragraph (11) of Code Section 7-1-261; in addition to functions or activities which include exercising powers granted by department regulations or exercising powers determined by the commissioner to be financial in nature or incidental to the provision of financial services, so long as these activities do not pose undue risk to the safety and soundness of the financial institution and are consistent with the objectives of this chapter as stated in Code Section 7-1-3; provided, however, unless the bank is exempt, nothing contained in this subparagraph shall relieve any such corporation or limited liability company from undertaking registration, licensing, or other qualification to engage in such functions or activities as may otherwise be required by law; and

(G) Other corporations created pursuant to act of Congress or pursuant to Chapter 3 of Title 14, known as the “Georgia Nonprofit Corporation Code,” for the purpose of meeting the agricultural, housing, health, transit, educational, environmental, or similar needs where the department determines that investment therein by banks is in the public interest;

(3) Shares of stock of small business investment companies organized under acts of Congress and doing business in this state, provided that the aggregate investment by the bank in such shares shall not exceed 5 percent of its statutory capital base; and

(4) Shares of stock or partnership interests in a corporation or partnership the primary business of which, as determined by the department, is to promote the public welfare or community development by engaging in the development of low and moderate-income housing, job training and job placement programs, credit counseling, public education regarding financial matters, small business development, and other similar purposes. The ability to invest in such stock or partnership interests shall also be subject to such limitations and approval procedures as the department deems necessary in order to assure that such investments are not a safety and soundness concern.

(d) A bank acquiring stock or an interest in an entity listed in paragraph (2) of subsection (c) of this Code section shall be subject to the following limitations:

(1) Where the entity carries on only such activities as the bank could legally perform itself, there is no limitation on investment;

(2) Where the activities of the entity go beyond those that the bank could legally perform, the bank's investment may not exceed 10 percent of its statutory capital base; and

(3) Where the investment is in stock of the Federal Home Loan Bank, there is no limitation on the bank's investment, provided that such investment is for the purpose of utilizing the services of the Federal Home Loan Bank.

(e) Prior approval by the department is required for acquisitions listed in subparagraphs (c)(2)(D) through (c)(2)(G) of this Code section. The department, by regulation, may permit expedited or notice only procedures and may provide for applicable administrative fees.

(f) The department may by rule or regulation prescribe less restrictive investment limitations than those contained in this Code section for banks meeting certain financial and management criteria.

1 12 U.S.C.A. § 1831b.

§ 7-1-289

(a) A bank may pledge or otherwise grant security interests in its assets to secure deposits of:

(1) Public funds;

(2) Funds of a pension fund for employees of a public body of the state;

(3) Funds for which a public body of the state or an officer or employee thereof or any court of law is the custodian or trustee pursuant to statute;

(4) Funds held by the department as receiver;

(5) Funds which are required to be secured by law or by an order of a court;

(6) Its own fiduciary funds or the fiduciary funds of an affiliate. In either case, the funds shall be deposited with the pledging institution and held in its commercial department; and

(7) Public funds deposited in another bank.

(b) Except for the deposits listed in subsection (a) of this Code section, a bank may not pledge or otherwise grant security interests in its assets as security for deposits unless otherwise specifically approved in writing by the department.

§ 7-1-290

(a) Except as authorized in subsection (b) of this Code section, in paragraph (10) of Code Section 7-1-260, and in paragraph (4) of Code Section 7-1-261, a bank shall not lend its credit, bind itself as a surety to indemnify another, or otherwise become a guarantor.

(b) A bank may act as a surety or guarantor if it has a substantial interest in the performance of the transaction involved or has a segregated deposit sufficient in amount to cover the institution's potential liability.

(1) Giving warranties or guaranties in connection with the handling of items for collection; the transfer, exchange, or collection of securities; or the sale or disposition of its assets;

(2) Issuing letters of credit; and

(3) Pledging or otherwise granting security interests in their assets to secure public funds deposited in the bank or another bank, including, but not limited to, deposits made pursuant to a pledging pool.

(d) Notwithstanding other provisions of law to the contrary, irrevocable letters of credit issued by banks domiciled in this state may, in the discretion of the party in whose favor such irrevocable letter of credit is issued, be accepted in lieu of any bond, surety, or pledge of assets required by the laws of this state or regulations promulgated pursuant to such laws.

§ 7-1-291

(a) Subject to the restrictions of subsection (c) of this Code section, a bank may borrow money and issue notes, debentures, or other obligations to evidence such borrowings.

(b) The following outstanding liabilities are not subject to the restrictions in this Code section:

(1) Liabilities to a federal reserve bank on account of money borrowed or rediscounts;

(2) Liabilities on account of the acquisition of reserve balances at a federal reserve bank or other reserve agent from a member or a nonmember bank;

(3) Liabilities on account of agreements to repurchase securities sold by the bank (commonly known as “repurchase agreements”);

(4) Liabilities in the form of subordinated securities under Code Section 7-1-419; and

(5) Liabilities which do not constitute or result from the borrowing of money under definitions prescribed by regulation of the department.

(c) A bank that wishes to borrow from sources other than those listed in subsection (b) of this Code section may borrow an aggregate amount which exceeds the sum of twice its unimpaired capital stock plus 100 percent of its unimpaired paid-in capital and retained earnings, provided that the bank's board of directors has approved a comprehensive written funding plan that addresses the following safety and soundness concerns:

(1) The plan must contain a detailed evaluation of the bank's management expertise and information systems to support the plan; and

(2) The plan must contain adequate asset and liability, liquidity, and funds management policies and procedures to specifically address the use of borrowings as an alternate funding source.

(d) The department may, notwithstanding the other provisions of this Code section, temporarily waive the requirements of this Code section to permit an individual bank to borrow for emergency purposes. The department shall review the funding plan of each bank as a part of its normal supervisory program. The department may prohibit or place additional restrictions upon borrowings of any bank which would, in the judgment of the department, constitute an unsafe or unsound practice in view of the condition and circumstances of the bank.

§ 7-1-292

Any bank may take, receive, reserve, and charge interest and fees on any loan, advance of money, or forbearance to enforce the collection of money at rates not exceeding the limits set by the laws of this state. Whenever such laws authorize a special interest or fee rate with respect to a designated type of loan, then a bank may charge that special interest or fee on loans of that type made by it. Whenever such laws authorize a person or a corporation other than a bank to charge a special interest or fee rate with respect to a designated type of loan, then a bank may charge such rate or fee on loans made by it which would qualify as the designated type of loan if made by the person or corporation so authorized without any requirement for the bank to obtain any license, qualification, or permit.

§ 7-1-293

(a) A bank desiring to be accorded treatment under this chapter as a savings bank or state savings and loan association shall so state in its articles.

(b) A savings bank or a state savings and loan association may apply to the department for permission to relinquish its status as a savings bank or state savings and loan association and become a commercial bank by filing an appropriate amendment to its articles. The department may exercise its discretion in determining whether to approve such a change and shall consider in connection therewith the same criteria considered in approving the original articles of incorporation.

(c) A savings bank shall provide its depositors with deposit insurance coverage pursuant to those deposit insurance provisions of this chapter applicable to commercial banks. A state savings and loan association shall provide its depositors, but not its shareholders, with deposit insurance coverage.

(d) Reserved.

(e) The conversion, merger, or consolidation of a federal savings and loan association or federal savings bank, including a federal mutual savings and loan association or federal mutual savings bank, shall be accomplished pursuant to the same procedures as are prescribed in this chapter for a conversion, merger, or consolidation involving a national bank, provided that the approval of such conversion by the members of such association or bank shall be by such vote as is required in the articles of association and bylaws of such association or bank. A federal mutual savings and loan association or federal mutual savings bank shall upon conversion be and be known as a mutual savings bank. In considering any plan for the conversion, merger, or consolidation of a federal savings and loan association or federal savings bank, the department shall not approve the plan unless it is satisfied that such plan is fair and equitable to all borrowers, depositors, and shareholders.

(f)(1) The conversion, merger, or consolidation of a federal mutual savings and loan association holding company or federal mutual savings bank holding company shall be accomplished pursuant to the same procedures as are prescribed in this chapter for a conversion, merger, or consolidation involving a national bank, provided that the approval of such conversion shall be by such vote of the members of such holding company as is required in the articles of association and bylaws of such holding company but shall be further conditioned upon the conversion of the federal savings and loan association or federal savings bank subsidiary of such holding company to a savings bank contemporaneously with the holding company's conversion.

(2) A state mutual savings bank holding company shall be subject to all of the rules and regulations of the department as if it were a commercial bank organized under this chapter, provided that it shall be authorized to own the stock of a savings bank subsidiary.

(g) With respect to the corporate governance of a mutual savings bank or mutual savings bank holding company, the members of the savings bank or holding company as defined in the articles of association, subject to the approval of the department, shall be the equivalent of the shareholders of a commercial bank or bank holding company having such rights, preferences, and powers and subject to such limitations as may be contained in the rules and regulations of the department and in the articles of association and bylaws of the savings bank or holding company approved by the department.

(h) Except as provided therein, Article 1 of this chapter and all other parts of this article shall apply to all mutual savings banks, savings banks, and state savings and loan associations and unless specifically exempt therein, all rules and regulations promulgated by the department applicable to banks shall be applicable to mutual savings banks, savings banks, and state savings and loan associations.

(i) Unless otherwise provided, the provisions of Part 18 of this article applicable to bank holding companies shall be applicable to mutual savings bank holding companies and unless specifically exempt therein, all rules and regulations promulgated by the department applicable to bank holding companies shall be applicable to mutual savings bank holding companies.

(j) In the event that a federal mutual savings and loan association or federal mutual savings bank upon conversion to a savings bank would own or hold assets or engage in any business that would not be allowable for a commercial bank, then the plan of conversion presented to the department shall include a plan for disposal of such assets or the termination of such nonconforming business within a reasonable time but in no event longer than four years from the date of the conversion.

§ 7-1-294

(a) Notwithstanding any existing provisions of law relative to the time of maturity or presentment of negotiable instruments, any financial institution doing business in this state may, at its option, outside of regular banking hours on any day, or at any time on a day which is in whole or in part a holiday, pay, certify, or accept negotiable or nonnegotiable instruments including a demand instrument dated on the holiday on which it is presented for payment, certification, or acceptance and transact any other business which would be valid if done on a business day during regular banking hours.

(b) Nothing in this Code section shall require any financial institution which remains open for business on all or a part of any holiday to do or perform any act on that day in its capacity as a collection agent which would not be required of it if it were closed on such holiday or part holiday.

§ 7-1-295

An operator of an automated teller machine in this state may charge a transaction fee to the customer using the machine. An agreement to share automated teller machines may not prohibit, limit, or restrict the right to charge such transaction fees and no such agreement may prohibit, limit, or restrict the right of one or more financial institutions to enter into an agreement not to charge such transaction fees to their common customers.

§ 7-1-296

(a) For purposes of this Code section, the term “federal power” means any banking or corporate power, right, benefit, privilege, or immunity of a national bank, the deposits of which are federally insured, that may be exercised by a national bank doing business in this state pursuant to the National Bank Act, 12 U.S.C. Section 1, et seq.; any other federal statute; or any regulation, ruling, circular, bulletin, order, or interpretation issued by the Office of the Comptroller of the Currency. Such term shall include only the provisions set forth above which were effective on January 1, 2018.

(b) Notwithstanding any other provisions of law, a bank may exercise any federal power while a national bank may also exercise such power subject to the same limitations and restrictions as are applicable to national banks, provided that the requirements of subsection (d) of this Code section have been satisfied. Nothing in this subsection shall be construed as authorizing a bank chartered by this state to exercise a federal power prior to compliance with subsection (d) of this Code section.

(c) Notwithstanding any other provisions of law, to the extent the National Bank Act, 12 U.S.C. Section 1, et seq., or any other federal law or regulation in effect on January 1, 2018, precludes or preempts or has been determined to preclude or preempt the application of any provision of law, rule, or regulation of this state, as to any national bank doing business in this state, a bank may also exercise such power authorized by the preclusion or preemption subject to the same limitations and restrictions as are applicable to a national bank, provided that the requirements of subsection (d) of this Code section have been satisfied. Nothing in this subsection shall be construed as authorizing a bank chartered by this state to exercise a federal power prior to compliance with subsection (d) of this Code section.

(d) In furtherance of the commissioner's statutory duties to regulate, supervise, and examine, a bank shall notify the commissioner in writing by certified or registered mail that, pursuant to subsection (b) or (c) of this Code section, it intends to exercise a federal power or to avail itself of any federal preclusion or preemption of any provision of law, rule, or regulation of this state. Such notice shall include the specific federal authorization of the activity to be utilized, the proposed action to be undertaken by the bank, documentation indicating that the bank satisfies the prescribed federal standards, if any, to engage in the activity, and such other information as may be required by the department. Upon receipt of such notice, the commissioner shall determine whether the exercise of any federal power or the availing of any federal preclusion or preemption, or any part thereof, by the bank is inconsistent with the purposes of this chapter or presents undue risk to the safety and soundness of the banking system. In making such a determination, the commissioner shall consider the financial condition of the bank, the regulatory safety and soundness ratings of the bank, the ability of bank management to administer and supervise the activity, and the overall impact on the safety and soundness to all other state chartered banks. Based on such a determination, the commissioner may object to the exercise of the federal power, in whole or in part, or to the federal preclusion or preemption of the law, rule, or regulation of this state, in whole or in part, including objecting to a level or quantity above which a bank may be seeking to exercise a federal power or availing itself of any federal preclusion or preemption of law, rule, or regulation of this state. If the commissioner so objects, the commissioner shall deliver such objection in writing by certified or registered mail to the bank within 45 days of receipt of the notice; provided, however, that the commissioner may extend such period of review for an additional 45 days by providing the bank with written notice of such extension prior to the expiration of the initial notice period. If the commissioner sends such an objection, the federal power, preclusion, or preemption, or the part thereof, objected to by the commissioner shall not be exercised by the bank pursuant to subsections (b) and (c) of this Code section. The objection by the commissioner of a bank's intent to exercise a federal power or avail itself of any federal preclusion or preemption shall not preclude such bank from providing notice to the department of its intent to exercise the same federal power or to avail itself of the same federal preclusion or preemption at a later date; provided, however, that the requirements of this subsection shall be applicable for any such additional notice. Further, in the event a bank determines, after satisfying the notice provisions of this subsection, that it no longer wishes to exercise a federal power or avail itself of any federal preclusion or preemption, then such bank shall provide written notice of such fact to the commissioner by certified or registered mail.

(e) Notwithstanding the provisions of Code Section 7-1-70, the department shall publish information stating the federal powers that are being exercised or federal preemptions or preclusions that are being utilized by each bank. All other information related to the notices or objections provided under subsection (d) of this Code section are governed by Code Section 7-1-70.

(f) Notwithstanding any other provisions of law, a bank may exercise any power that was granted through an order or ruling declared by the commissioner on or before January 1, 2018, pursuant to the current or former provisions of Code Section 7-1-61, 7-1-61.1, or 7-6A-12 and which has not been rescinded or withdrawn.

(g) Any federal power or activity authorized and exercised or conducted pursuant to this Code section shall be independent from, and in addition to, any other powers granted to banks under applicable laws of this state or rules or regulations promulgated thereunder. The express and incidental powers granted to banks under the Official Code of Georgia Annotated are not limited or otherwise restricted by this Code section.

(h) Nothing in this Code section shall be construed as limiting the commissioner's authority conferred by this chapter, including the powers granted under Code Sections 7-1-61 and 7-1-61.1.

(i) Nothing in this Code section shall be construed as authorizing the imposition of interest rates by a bank in excess of those authorized by Chapter 4 of this title nor shall any provision of this Code section be construed as permitting a bank to make loans in violation of Chapter 17 of Title 16.

§ 7-1-310

(a) A trust company may act, alone or with others, as:

(1) Fiduciary;

(2) Investment advisor;

(3) Custodian of property;

(4) Agent or attorney in fact;

(5) Registrar or transfer agent of securities;

(6) Fiscal agent of the United States, a state or a public body thereof, a corporation, or a person; and

(7) Treasurer of a public body or of a nonprofit corporation.

(b) A trust company shall have, in respect to any capacity in which it may act pursuant to a power under subsection (a) of this Code section, all the rights and duties which a person has in such capacity under applicable laws and under the terms upon which the trust company is designated to act in such capacity.

(c) Every bank and credit union operating pursuant to this chapter shall possess all of the rights, privileges, powers, and responsibilities herein conferred upon trust companies; provided, however, that no such bank or credit union shall exercise such powers and privileges without the prior written approval of the department after a careful consideration of the factors enumerated in Code Section 7-1-394, relating to the chartering of trust companies. Any bank exercising or partially exercising trust powers prior to February 27, 1976, authorized by its articles may continue to exercise or partially to exercise those powers to the extent approved by the department without the necessity of obtaining a new approval.

(d) Notwithstanding any other provisions of this chapter to the contrary, any bank, credit union, or trust company which does not exercise trust powers as provided in this chapter, whether or not such powers have been incorporated into its articles, may, with the consent of the department, contract with any bank, credit union, or trust company exercising trust powers to provide for the latter bank, credit union, or trust company to offer trust services through the branches and offices of the former bank, credit union, or trust company.

§ 7-1-311

Except as otherwise permitted by Code Section 7-1-315, a trust company in its capacity as fiduciary shall:

(1) Segregate all property (other than items in the course of collection) held as a fiduciary from its nonfiduciary assets and keep separate records of all such fiduciary property for each account for which such property is held;

(2) Hold property held as fiduciary in a form complying with applicable law;

(3) Keep fiduciary funds awaiting investment or distribution in deposits in an authorized financial institution (including, in the case of a trust company which is also a bank, its own commercial department or the commercial department of an affiliate as provided in Code Section 7-1-289) which is insured or, to the extent of any deficiencies in insurance coverage, fully secured by a pledge or assignment of bonds or obligations of the United States, this state, or a public body of either or other obligations guaranteed as to principal and interest by the United States, this state, or a public body of either or real estate loans secured by a first lien or security title to improved realty and insured pursuant to any title of the National Housing Act. 1 The beneficial owners of such uninvested funds shall have a first and prior lien on such security;

(4) Not be required to execute a bond or give any security required by the law of fiduciaries but may give its own bond and pledge or otherwise grant security interests in its assets as security for the faithful performance of its duties as fiduciary or as surety for such faithful performance by any cofiduciary where such is requested or otherwise required; and

(5) Provide any oath or affirmation or any affidavit required of the trust company through an officer thereof acting on behalf of the trust company.

1 12 U.S.C.A. § 1701 et seq.

§ 7-1-312

A trust company which is not a bank may, apart from its fiduciary activities, invest in stock and investment securities, except that it may not acquire or hold its own stock otherwise than pursuant to paragraphs (8) and (9) of Code Section 7-1-261.

§ 7-1-313

(a) As used in this Code section, the term “collective investment fund” shall include a common trust fund and any other type of collective investment fund.

(b) A trust company may establish and maintain collective investment funds for the investment or reinvestment of property which:

(1) Is contributed by the trust company in a capacity in which it is authorized to act pursuant to Code Section 7-1-310; and

(2) Is eligible for contribution to a collective investment fund under this Code section.

(c) Property shall be eligible for contribution whenever the instrument, judgment, decree, or order under which the trust company holds the property does not prohibit investment in the type of collective investment fund involved, provided that, if the trust company holds the property under circumstances limiting it to investing the property in legal investments for fiduciaries, then it may invest the property only in a collective investment fund limited to assets authorized as legal investments for a fiduciary.

(d) The department shall regulate the establishment, operation, and maintenance of collective investment funds. Such regulations of the department shall comply with the general standards for exercise of the regulatory power of the department under this chapter and, in addition, shall be designed to assure:

(1) Ratably equal treatment of the participants in a fund by imposing minimum requirements for the method and frequency of valuation of participations in the fund, for the time and method of admission or withdrawals of participations in the fund, and for the determination of interests of participants in the assets and income of the fund; and

(2) The competitive equality between trust companies and national banks exercising fiduciary powers with respect to the authority to establish and maintain collective investment funds to the extent compatible with the general purposes of this chapter.

(e) No mistake made in good faith and in the exercise of due care in connection with the administration of a collective investment fund shall be deemed a violation of this Code section or of any other duty of the trust company if, promptly after discovery of the mistake, the trust company takes whatever action may be practicable in the circumstances to remedy the mistake.

(f) Any other trust company or national bank with trust powers which is a member of an affiliated group (as defined in Section 1504 of the Internal Revenue Code) with a trust company maintaining collective investment funds may participate in one or more such funds as though they were maintained by the participating trust company. Such participation may be made pursuant to agreement providing for reasonable compensation for the trust company maintaining the fund or funds.

(g) A trust company, in any capacity in which it may act under Code Section 7-1-310, may invest property collectively in accordance with the specific terms upon which it receives such property, without regard to the restrictions of this Code section.

§ 7-1-314

A trust company or a financial institution with fiduciary powers may, in its fiduciary capacity, purchase securities underwritten by a syndicate which includes the financial institution or an affiliate of the financial institution, provided such purchase is otherwise prudent, not prohibited by the instrument governing the fiduciary relationship, and not otherwise inconsistent with regulations issued by the department.

§ 7-1-315

(a) A trust company complying with this Code section will be deemed to have satisfied its fiduciary obligations and duties with respect to:

(1) The investment of fiduciary funds awaiting investment or distribution;

(2) The charging of fees in connection therewith; and

(3) The disclosure of policies, procedures, and fees in connection therewith.

(b) A trust company may invest fiduciary funds awaiting investment or distribution in short-term, trust-quality investment vehicles, through the medium of a collective investment fund or otherwise. A trust company may also place fiduciary funds awaiting investment or distribution in deposits of the commercial department of such trust company, in the case of a trust company which is also a bank, or in deposits of an affiliate bank; provided, however, that the rate of interest paid on such deposits shall be at least equal to the rate paid by such department or affiliate bank on deposits of similar terms and amounts. A fiduciary shall have complied with this Code section if cash awaiting investment or distribution in excess of $1,000.00 is invested or deposited within 30 days of receipt or accumulation thereof. The provisions of this subsection shall apply notwithstanding any other law or rule restricting or limiting the investments of fiduciaries.

(c) In addition to any other compensation to which it may be entitled, a trust company may, without necessity of obtaining the approval of any person or court, charge a reasonable fee for the temporary investment of fiduciary funds awaiting investment or distribution, which fee may be calculated upon the amount of such funds actually invested and upon the income produced thereby.

(d) A trust company shall have complied with its duty to disclose fees and practices in connection with the investment of fiduciary funds awaiting investment or distribution if the trust company's periodic statements set forth the trust company's practice and method of computing fees.

(e) This Code section shall be construed as a codification of existing law concerning the fiduciary duties of trust companies and not as a change in such law.

§ 7-1-316

(a)(1) A trust company shall provide an irrevocable letter of credit or pledge securities acceptable to the department to defray the costs of a liquidation of the trust company in the event it should be placed into receivership.

(2) The amount of the securities or the letter of credit required in this Code section shall be determined by the department as appropriate to defray the costs associated with receivership, provided that such amount shall be no less than $500,000.00.

(3) Any letter of credit shall be:

(A) Made payable to the department and issued by a Federal Home Loan Bank or a federally insured financial institution, approved by the department and authorized to do business in this state;

(B) In a form and with terms acceptable by the department; and

(4) Any pledged securities shall be held at a bank authorized to do business in this state, and any fees associated with holding such securities shall be the responsibility of the trust company.

(b) If a trust company is placed in receivership, the department may, without regard to any priorities, preferences, or adverse claims, reduce the pledged securities or the letter of credit provided by a trust company to cash and, as soon as practicable, utilize the cash to defray the costs associated with receivership.

§ 7-1-317

(a) The department may require, based on safety and soundness, that a trust company maintain a minimum amount of capital, provided that such amount shall in no event be less than $3 million. The department may alter the amount of capital required to be maintained by a trust company from time to time as may be necessary for the safe and sound operation of such trust company.

(b) The department may consider the following in establishing the minimum amount of capital:

(1) The nature and type of business to be conducted;

(2) The nature and liquidity of assets to be held;

(3) The amount of fiduciary assets to be under management of the trust company;

(4) The type of fiduciary assets to be held and the depository for such assets;

(5) The complexity of fiduciary duties and degree of discretion to be undertaken;

(6) The competence and experience of management;

(7) The extent and adequacy of internal controls;

(8) The presence or absence of annual unqualified audits by an independent certified public accountant;

(9) The reasonableness of business plans for retaining or acquiring additional equity capital;

(10) The existence and adequacy of insurance to protect the clients, beneficiaries, and grantors of the trust company;

(11) Any history of operating losses;

(12) Any history of loss in relation to fiduciary or custodial accounts; and

(13) The amount of support from the trust company's parent or affiliate.

§ 7-1-318

(a) No trust company shall pledge or create a lien on any of its assets except to secure:

(1) The repayment of money borrowed; or

(2) Trust accounts administered by the trust company.

(b) An act, deed, conveyance, pledge, or contract in violation of this Code section shall be considered void.

§ 7-1-320

As used in this part, the term:

(1) “Affiliate transfer” means a transfer by which a bank or trust company delegates, assigns, or transfers to an affiliated trust company or to an affiliated bank which has received the required approvals from the appropriate regulatory authorities to exercise trust powers all of its rights, powers, privileges, accounts, and designations with respect to one or more of its various capacities as fiduciary.

(2) “Affiliated trust company” means a trust company which is affiliated with a bank. A trust company shall be considered an affiliate with a bank in accordance with the definition of such term set forth in paragraph (1) of Code Section 7-1-4. For the purposes of this part, the term affiliated trust company shall also include an affiliated bank which has received the required approvals from the appropriate regulatory authorities to exercise trust powers.

(3) “Bank” means a corporation as defined in either paragraph (7) or (23) of Code Section 7-1-4 and having its principal place of business in Georgia.

(4) “Fiduciary” means a bank or trust company acting in such capacity as set forth in paragraph (20) of Code Section 7-1-4 or as further defined by regulations of the department.

(5) “Trust company” means a corporation as defined in paragraph (40) of Code Section 7-1-4 or a national bank having:

(A) Authority to conduct business only to the extent of its trust powers as provided in 12 U.S.C. Section 92a; and

(B) A principal place of business in Georgia.

§ 7-1-321

(a) Any bank authorized by law to engage in the business of acting as a fiduciary is authorized and empowered to make an affiliate transfer whether or not each governing instrument expressly provides for or contemplates an affiliate transfer or whether or not the fiduciary capacity was created by will, indenture, trust, court order, agreement, or other means. No affiliate transfer shall constitute:

(1) A resignation or disqualification of the bank as fiduciary; or

(2) A relinquishment of trust powers by the bank making the affiliate transfer.

Upon execution of an instrument effecting an affiliate transfer by a bank, the affiliated trust company shall, as of the date specified in the instrument, have all of the rights, powers, privileges, appointments, accounts, and designations of the bank regarding each fiduciary capacity so transferred and shall have title to all property, real, personal, and mixed, and all debts due on whatever account, and all other choses in action, and each and every other interest of or belonging to or due to the bank as fiduciary shall be taken and deemed to be transferred to and vested in the affiliated trust company as fiduciary without further act or deed. The affiliated trust company shall file a certificate of transfer with the department setting forth its name, a copy of its governing instrument, a list of the banks with which it is affiliated, a statement of the facts which establish the affiliate relationship, and such other information as may be appropriate.

(b) Upon an affiliate transfer by a bank, the affiliated trust company, in each fiduciary capacity transferred, shall thenceforth be responsible for the performance of all of the duties, responsibilities, and obligations of the bank in such fiduciary capacity, and any claim existing or action or proceeding pending by or against the fiduciary may be prosecuted as if the affiliate transfer had not taken place and the affiliated trust company, as fiduciary, may be substituted in place of the bank, as fiduciary. Neither the rights of creditors to nor any liens upon the property held in any fiduciary capacity shall be impaired by any affiliate transfer.

§ 7-1-322

(a) Notwithstanding the provisions of Code Section 7-1-321, no affiliate transfer shall relieve the bank of any liability with respect to any of its acts and doings as fiduciary, and the bank shall remain liable and responsible to all affiliate transfer beneficiaries and other parties at interest with respect to all actions of the affiliated trust company as if performed by the bank itself.

(b) The bank shall be relieved of any claims, liabilities, or actions arising after the affiliate transfer where such affiliate transfer is expressly authorized by the terms of the instrument governing the fiduciary capacity.

(c) Upon application by an interested party, the bank shall within 30 days either abandon the affiliate transfer subject to such application or proceed to have a successor fiduciary appointed as provided by law.

(d) Nothing in this Code section shall be construed to impair any right of the grantor or beneficiaries of any fiduciary relationship under applicable instruments or otherwise to secure or provide for the appointment of a substituted fiduciary.

§ 7-1-323

In addition to and not in limitation of the other powers provided in this part, any bank shall be entitled and empowered to designate an affiliated trust company as its agent for the performance of all acts, obligations, and responsibilities of the bank with respect to any fiduciary capacity. In such event, the bank shall remain fully responsible and liable with respect to all actions of the affiliated trust company as if performed by the bank itself. No such agency relationship shall:

(1) Be deemed an impermissible delegation of responsibility or duty by the bank; or

(2) Constitute a resignation or disqualification of the bank as fiduciary or a relinquishment of trust powers by the bank.

§ 7-1-324

Upon any affiliate transfer, the affiliate trust company may be designated in any deed, trust, agreement, filing, instrument, notice, certificate, pleading, or other document as successor fiduciary pursuant to this part.

§ 7-1-325

Except as expressly provided, nothing in this part shall be construed to amend or modify in any way the laws of the State of Georgia with respect to the establishment of banks, trust companies, branch banks, or bank holding companies or the conduct of the banking business or any part thereof.

§ 7-1-330

As used in this part, the term:

(1) “Fiduciary investment company” means a corporation which is an investment company as defined by the act of Congress entitled “Investment Company Act of 1940” 1 and is incorporated in accordance with Chapter 2 of Title 14 so as to constitute a medium for the investment of funds held by trust institutions and foreign trust institutions in a fiduciary capacity, either alone or with one or more cofiduciaries.

(2) “Foreign trust institution” means any state banking institution or trust company organized under the laws of any state other than Georgia or any national banking association incorporated under the laws of the United States and having its principal office in some state other than Georgia which has trust powers and is authorized to act in a fiduciary capacity under the laws under which it was incorporated.

(3) “Investment adviser” of a fiduciary investment company means:

(A) Any trust institution which, pursuant to contract with a fiduciary investment company possessing the qualifications provided by this part, regularly furnishes advice to such investment company with respect to the desirability of investing in, purchasing, or selling securities or other property or is empowered to determine what securities or other property shall be purchased or sold by such investment company; and

(B) Any person or corporation other than a trust institution, who, pursuant to contract with such trust institution, regularly performs substantially all of such duties undertaken by such trust institution.

(4) “Trust institution” means any trust company or any national bank with its principal office located in this state, authorized to act as a fiduciary.

1 15 U.S.C.A. § 80a-1 et seq.

§ 7-1-331

Any one or more trust institutions may cause a fiduciary investment company or companies to be organized and incorporated, but no trust institution or foreign trust institution may own an interest in more than seven fiduciary investment companies. A fiduciary investment company shall not begin business, except to select an investment adviser, until it is approved by the department.

§ 7-1-332

Any such fiduciary investment company shall be incorporated under and subject to Chapter 2 of Title 14. The incorporators shall be persons who are officers or directors of the trust institution or institutions causing such fiduciary investment company to be incorporated; and the articles of incorporation shall set forth the name of each trust institution participating in such incorporation and the amount of stock originally subscribed for by each, together with such other facts as are required by Chapter 2 of Title 14.

§ 7-1-333

Trust institutions and foreign trust institutions, as defined by this part, acting in a fiduciary capacity and for fiduciary purposes, if exercising due care as a prudent investor, and with the consent of any cofiduciary, may invest and reinvest funds held in such fiduciary capacity in the shares of stock of one or more fiduciary investment companies, except where the will, trust indenture, or other instrument under which such trust institution or foreign trust institution acts prohibits such investment, provided that the fiduciary investment company, by its articles of incorporation issued and granted in conformity with Chapter 2 of Title 14, shall have and possess the corporate powers required by this part and be subject to the limitations set forth by this part; provided, further, that no such trust institution or foreign trust institution shall invest in the stock of a fiduciary investment company on behalf of any estate, trust, or fund administered by such trust institution or foreign trust institution a sum or amount which would result in such estate, trust, or fund having a total investment in such stock in excess of the maximum amount or percentage that might be invested by such estate, trust, or fund, under the regulations of the department in effect at the time of such investment, in any common trust fund having total assets equal to the total assets of the fiduciary investment company as increased by the proposed investment; and no trust institution or foreign trust institution shall invest in the stock of a fiduciary investment company if, immediately after such investment and as a consequence thereof, it would own more than 25 percent of the voting securities of such fiduciary investment company which would then be outstanding.

§ 7-1-334

Every fiduciary investment company in which a trust institution or foreign trust institution is authorized by this part to own and hold corporate stock or shares, in order to qualify for such investments, shall have such corporate powers as may be granted by Chapter 2 of Title 14 by virtue of its incorporation under those chapters and shall, in addition, have the following corporate powers under its articles of incorporation and, by its articles of incorporation or its bylaws, be subject to the limitations and restrictions set forth in this Code section:

(1) The stock of any such fiduciary investment company shall be owned and held only by trust institutions and foreign trust institutions acting as fiduciaries or cofiduciaries but may be registered in the name of the nominee or nominees of any such trust institution or foreign trust institution. Such stock shall not be subject to transfer or assignment except to the trust institution or foreign trust institution on whose behalf the stock is held by any such nominee or nominees or to a fiduciary or cofiduciary which becomes successor to the shareholder and which is also a trust institution or foreign trust institution qualified to hold such stock.

(2) A fiduciary investment company shall have no less than five directors, who need not be shareholders but shall be officers or directors of trust institutions or foreign trust institutions holding stock in such fiduciary investment company; provided, however, that no more than two directors shall be officers or directors of any one trust institution or foreign trust institution if the fiduciary investment company has been organized and incorporated by three or more trust institutions.

(3) In acquiring, investing, reinvesting, exchanging, selling, and managing its assets, every fiduciary investment company shall exercise the judgment and care under the circumstances then existing which men of prudence, discretion, and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the safety of their capital. Within the foregoing limitations, a fiduciary investment company may acquire and retain every kind of investment, specifically including (but not by way of limitation) bonds, debentures, and other corporate obligations and corporate stocks, preferred or common, which men of prudence, discretion, and intelligence acquire or retain for their own account, provided that a fiduciary investment company shall not at any time:

(A) Invest in real estate, commodities, or commodity contracts;

(B) Participate on a joint or joint and several basis in any securities trading account;

(D) Make loans to any person or persons, except that the purchase of a portion of an issue of debt securities, convertible debt securities, debt securities with warrants, rights, or options attached, or other similar securities when originally issued or thereafter, of a character commonly distributed publicly, shall not be considered the making of a loan;

(E) Purchase or retain the securities of any issuer if immediately after such acquisition and as a result thereof the following requirements would not be met: at least 75 percent of the total assets in the fiduciary investment company taken at market value are represented by cash and cash items, securities issued or guaranteed by the United States or an instrumentality thereof, and other securities which, as to any one issuer, do not represent more than 10 percent of the value of the total assets of the fiduciary investment company;

(F) Purchase or otherwise acquire the securities of any other investment company as that term is defined in the act of Congress entitled “Investment Company Act of 1940”; 1

(G) Act as underwriter of the securities of other issuers;

(H) Borrow money; or

(I) Engage in margin transactions or short sales or write put or call options for the purchase or sale of securities.

(4) A fiduciary investment company may acquire, purchase, or redeem its own stock and may, by means of contract or by its bylaws, bind itself to acquire, purchase, or redeem its own stock; but it shall not vote shares of its own stock theretofore redeemed.

(5) A fiduciary investment company shall not be responsible for ascertaining the investment powers of any fiduciary who may purchase its stock, shall not be liable for accepting funds from a fiduciary in violation of restrictions of the will, trust indenture, or other instrument under which such fiduciary is acting in absence of actual knowledge of such violation, and shall be accountable only to the department and the fiduciaries who are the owners of its stock.

(6) Every fiduciary investment company subject to the supervision and regulation of the comptroller of the currency of the United States shall comply with all applicable rules and regulations of that agency to the extent that such rules and regulations are in addition to or in conflict with rules and regulations promulgated by the department.

1 15 U.S.C.A. § 80a-1 et seq.

§ 7-1-335

Without limitation on the authority conferred by Article 1 of this chapter, the department shall have authority to adopt and issue reasonable and uniform rules and regulations to govern the conduct and management of all fiduciary investment companies. The department shall not examine fiduciary investment companies subject to regular examination by the comptroller of the currency of the United States or the Board of Governors of the Federal Reserve System but shall otherwise have full power to examine fiduciary investment companies and enforce laws concerning them as though they were financial institutions.

§ 7-1-336

Except as may be specifically authorized by rule or regulation of the department, no trust institution or foreign trust institution holding stock in a fiduciary investment company may advertise or publicize its participation in such fiduciary investment company, provided that any trust institution or foreign trust institution holding stock in a fiduciary investment company shall furnish the annual or periodic financial reports of such fiduciary investment company, on request, to any person having a beneficial interest therein and the fact of the availability of such material may be given publicity in connection with the promotion of the fiduciary services of such trust institution or foreign trust institution.

§ 7-1-337

No person shall serve or act as investment adviser of a fiduciary investment company except pursuant to a written contract which has been approved by the vote of a majority of the outstanding voting securities of such fiduciary investment company and which:

(1) Precisely describes all compensation to be paid thereunder;

(2) Shall continue in effect for a period more than two years from the date of its execution only so long as such continuance is specifically approved at least annually by the board of directors or by vote of a majority of the outstanding voting securities of such company;

(3) Provides, in substance, that it may be terminated at any time, without the payment of any penalty, by the board of directors of such company or by vote of a majority of the outstanding voting securities of such company on not more than 60 days' written notice to the investment adviser; and

(4) Provides, in substance, for its automatic termination in the event of its assignment by the investment adviser.

§ 7-1-338

No fiduciary investment company shall refuse participation to any trust institution or foreign trust institution, as defined in this part, which is otherwise qualified to engage in a fiduciary investment program.

§ 7-1-350

A bank which has adopted rules governing deposits or withdrawal of deposits shall give notice of the rules and all changes therein to each customer whose deposits are affected by such rules, either by delivery of a copy to such customer or by posting them in a conspicuous area in the main office and in all branch offices of the bank. If such rules are stated on a signature card or other contract signed by the customer, the bank shall be deemed to have given notice of the rules for purposes of this provision even if such signature card or contract is returned to the bank.

§ 7-1-351

(a) A bank may receive deposits from:

(1) A minor who is at least 16 years of age; or

(2) One or more minors jointly with one or more adults, as party to and with the same effect as a multiple-party account under Article 8 of this chapter.

(b) A bank may use electronic means, including, but not limited to, wire and mobile application software, to provide access to and facilitate the movement of money in such deposit account.

(c) A bank or trust company may rent a safe-deposit box or other receptacle for safe deposit of property to, and receive property for safe deposit from:

(1) A minor who is at least 16 years of age; or

(2) One or more minors jointly with one or more adults.

(d) A bank or trust company may deal with a minor who is at least 16 years of age with respect to a deposit account or safe-deposit agreement covered by paragraph (1) of subsection (a) or paragraph (1) of subsection (c) of this Code section without the consent of a parent or guardian and with the same effect as though the minor were an adult. A parent or guardian shall not have any right in that capacity to interfere with any such transaction. Any action of the minor with respect to such deposit account or safe-deposit agreement shall be binding on the minor with the same effect as though the minor were an adult.

(e) Nothing in this Code section shall be deemed to require a bank or trust company to provide deposit accounts or safe-deposit agreements authorized by this Code section.

§ 7-1-352

(a) Whenever any agent, administrator, executor, guardian, trustee, either express or implied, or other fiduciary, whether bona fide or mala fide, shall deposit any money in any bank to his credit as an individual, or as such agent, trustee, or other fiduciary, whether the name of the person or corporation for whom he is acting or purporting to act be given or not, such bank shall be authorized to pay the amount of such deposit, or any part thereof, upon the order of such agent, administrator, executor, guardian, trustee, or other fiduciary, signed with the name in which such deposit was entered, without being accountable in any way to the principal, cestui que trust, or other person or corporation who may be entitled to or interested in the amount so deposited.

(b) Nothing contained in this Code section shall prevent the person or corporation claiming the beneficial interest in or to any deposit in any bank from resorting to the courts to claim such deposit, provided such action is brought and served before such deposit is paid out and in accordance with the requirements of Code Section 7-1-353.

§ 7-1-353

(a) Except as provided in subsections (b) and (c) of this Code section, a bank or trust company shall not be required to deny control over or access to a deposit account or property held in safe deposit (whether by the bank or trust company or in a safe-deposit box or other receptacle leased to a customer) to:

(1) The customer in whose name the account or property is held by the bank or trust company (including one of two depositors or lessees entitled to such control or access by virtue of their contract with the bank or trust company); or

(2) A person or group of persons who is authorized to draw on or control the account or property pursuant to a certified corporate resolution or other written arrangement with the customer currently on file with the bank or trust company.

(b) A bank shall be entitled to act and rely upon:

(1) A court order, distraint, levy, garnishment, or other effective legal process;

(2) An agreement of the parties concerning an adverse claim; or

(3) A claim of the type described in subsection (a) of this Code section accompanied by a bond or other indemnity adequate to protect the bank or trust company from loss as a consequence of recognizing an adverse claim.

(c) Nothing in this Code section shall impair the effect of a discharge which a bank or trust company would be entitled to under Code Section 11-3-602.

§ 7-1-354

(a) A bank or trust company which receives money for transmission shall give the customer a receipt setting forth:

(1) The date of receipt of the money;

(2) The amount of the money in dollars and cents; and

(3) If the money is to be transmitted to a foreign country in the currency of such country, the amount of the money in such currency.

(b) In an action by a customer against a bank or trust company for recovery of money delivered for transmission, the burden of proof of delivery of the money in accordance with the instructions of the customer shall be on the bank or trust company; but an affidavit by an agent or correspondent of the bank or trust company that the money was delivered in accordance with the customer's instructions shall be prima-facie evidence of the delivery of the money in accordance with the customer's instructions.

§ 7-1-355

A bank, trust company, or savings and loan association may receive property for safe deposit and rent out receptacles and safe-deposit boxes on the terms and conditions prescribed by it; but such terms and conditions shall not bind any customer to whom the bank, trust company, or savings and loan association does not give notice thereof either by delivery of a copy or by posting in its offices where such receptacles or safe-deposit boxes are located, or who does not otherwise agree to such terms and conditions.

§ 7-1-356

(a) Any financial institution contracting with a person for the use of a safe-deposit box or receiving property from a person for safekeeping, upon presentation of satisfactory proof of the death or legal incompetence of such person, shall permit any person named in an order granted by the probate court having jurisdiction of such person's estate to open and examine the contents of any safe-deposit box leased by the decedent or legally incompetent person or to examine the property left by such person for safekeeping, in the presence of an officer of the financial institution. The financial institution, if so requested by such person, shall deliver:

(1) Any writing purporting to be a will of the decedent to the probate court having jurisdiction of the decedent's estate;

(2) Any writing purporting to be a deed to a burial plot or to give burial instructions to the person named in such order;

(3) Any document purporting to be an insurance policy on the life of the decedent to the beneficiary named therein;

but no other contents shall be removed pursuant to this Code section.

(b) Within five banking days after the order of the court is presented to the financial institution, the financial institution shall permit the person named in such order to inventory the contents of any safe-deposit box leased or rented to the decedent or legally incompetent person or the property left by such person for safekeeping. The inventory shall be conducted in the presence of an officer or employee of the financial institution by the person named in such order. The inventory shall be signed by such persons, and a copy thereof shall be retained by the financial institution and may be filed with the probate court.

(c) The financial institution shall be free from all liability with respect to any action, claim, or demand of whatever nature asserted by any heir, legatee, distributee, creditor, administrator, executor, guardian, trustee, or other fiduciary or by any person whomsoever when acting pursuant to such letters of authority.

(d) Upon presentation of a certified copy of his letters of authority, the financial institution shall grant the personal representative access to any safe-deposit box or property in safekeeping in the sole name of a decedent or legally incompetent person to permit him to remove from such box or place of safekeeping any part or all of the property therein without liability.

§ 7-1-358

In accordance with and subject to the limitation of such regulations as the department may prescribe, a bank may, from time to time, charge a dormant account a reasonable service charge.

§ 7-1-359

No person shall charge a fee or solicit any other form of compensation for the purpose of conducting a search for dormant, abandoned, or unclaimed deposit accounts or other abandoned properties whether held by a financial institution or escheated to any governmental agency. Notwithstanding the foregoing, a commission or finder's fee not to exceed 10 percent of actual sums recovered by the owner of such accounts may be agreed to by the parties. All moneys and properties located by a person to be compensated by the payment of such a commission or finder's fee shall be paid directly to the owner and may not be paid over to the person to receive the commission or finder's fee whether pursuant to a duly executed power of attorney or otherwise.

§ 7-1-360

(a) No financial institution shall be required to recognize the claim of any third party to any deposit, or withhold payment of any deposit to the depositor or to his order, unless and until the financial institution is served with citation, order, or other appropriate process issuing out of a court of competent jurisdiction in connection with a suit instituted by such third party for the purpose of recovering or establishing an interest in such deposit. Neither shall any financial institution be required to disclose or produce to third parties, or permit third parties to examine any records pertaining to a deposit account, loan account, or other banking relationship except:

(1) Where the financial institution itself is a proper or necessary party to a proceeding in a court of competent jurisdiction;

(2) Where the records of accounts or other customer records are requested through subpoena or other administrative process issued by a state, federal, or local administrative agency having competent jurisdiction over the depositor or other customer or where such records are requested pursuant to Georgia or federal law governing civil practice or procedure in conjunction with an ongoing civil action in a Georgia state or federal court of competent jurisdiction;

(3) Where the records of accounts or other customer records are requested in conjunction with an ongoing criminal or tax investigation of the depositor or other customer by a state or federal grand jury, taxing authority, or law enforcement agency; or

(4) Where the records of accounts or other customer records are requested by any state or federal regulatory agency having jurisdiction over the financial institution.

(b) Unless directed otherwise by a court of competent jurisdiction, before disclosure, production, or examination of records produced under paragraph (1) or (2) of subsection (a) of this Code section, the agency or other party seeking the disclosure or production of the records shall provide notification to the depositor or other customer of such request. Notification of the depositor or other customer under circumstances set forth in paragraphs (3) and (4) of subsection (a) of this Code section shall not be made without the consent of the requesting authority. For purposes of ascertaining whether or not proper notice has been given or whether or not the depositor or other customer may be notified, the financial institution may rely upon appropriate certification or written assurances from the requesting party and in doing so shall be relieved of any liability which might be asserted in connection with such disclosures.

(c) Each customer or depositor to whom notice of an order, subpoena, or request for disclosure, examination, or production of records was lawfully given may, prior to the date specified therein for disclosure, examination, or production, file in the court issuing an order or subpoena for the records or in the Georgia or federal court where the civil matter is being heard or, in the absence of such a court, in the superior court of the county in which the financial institution is located a motion to quash the order, subpoena, or request or for a protective order and shall serve such motion on the party requesting disclosure and the financial institution as may be otherwise provided by law for similar motions. Failure to file and serve such motion to quash or for protection shall constitute consent for all purposes to disclosure, production, or examination made pursuant to this Code section.

§ 7-1-370

(a) Subject to the restrictions of subsection (b) of this Code section and of Code Section 7-1-371 in regard to reserve funds, a financial institution may deposit its funds in any depository which is:

(1) Selected by, or in any manner authorized by, its directors;

(2) Authorized by law to receive deposits; and

(3) In the case of a depository located in the United States, one which has deposit insurance issued by a federal public body to depositories of the type involved.

(b) If a director of the financial institution has a relationship to a depository as either:

(1) An officer or director; or

(2) An owner of 5 percent or more of the shares of the depository,

the depository shall be approved by a majority of the directors other than the director who has such relationship.

§ 7-1-371

(a) For the purposes of the reserve requirement imposed by subsection (c) of this Code section and the composition of the required reserve fund under subsection (d) of this Code section, the term:

(1) “Demand deposits” means the aggregate of deposits which can be required to be paid on demand or within less than 30 days after demand;

(2) “Reserve agent” means a depository of a financial institution selected as provided in Code Section 7-1-370 for the deposit of funds included in the required reserve fund.

(b) A financial institution which is governed by 12 C.F.R. 204 shall maintain, at all times, a reserve fund in accordance with the applicable federal requirements.

(c) A financial institution which is not governed by 12 C.F.R. 204 shall maintain, at all times, a reserve fund in an amount fixed by regulation of the department, but in no case shall such reserve be required in excess of the aggregate of 15 percent of demand deposits and 5 percent of other deposits.

The amount of the required reserve for each day shall be computed on the basis of average daily deposits covering such biweekly or shorter periods as shall be fixed by regulation of the department.

(d) In the case of a financial institution which is not governed by 12 C.F.R. 204, such portion of the reserve fund against deposits as shall be fixed by regulation of the department shall consist of United States coin and currency on hand or on deposit, subject to call without notice, in a reserve agent. The balance of such reserve fund shall be kept in obligations of:

(1) General obligations of the United States or of a subsidiary corporation of the United States government fully guaranteed by such government, or to obligations issued by the Federal Land Bank, Federal Home Loan Banks, Federal Intermediate Credit Bank, Bank for Cooperatives, Federal Farm Credit Banks regulated by the Farm Credit Administration, Federal Home Loan Mortgage Corporation, or Federal National Mortgage Association;

(2) Obligations of the State of Georgia or any instrumentality of this state; or

(3) Other issuers whose obligations are marketable and approved by regulation of the department for the purpose of this Code section.

(e) All assets which are part of the reserve fund required by this Code section shall be owned absolutely by the financial institution and shall not be pledged, assigned, or hypothecated in any manner or subject to setoff. The value of all securities which constitute a part of a financial institution's reserve fund shall be computed at the current market value thereof.

(f) A financial institution shall give written notice to the department, in the manner prescribed by the department for such notice, of any deficiency in the amount or form of the reserve fund required by this Code section within three business days after the close of any scheduled averaging period during which such deficiency occurs.

(g) Immediately following the closing of any scheduled averaging period during which a deficiency in the required reserve occurs, the financial institution will take immediate action to restore the deficiency; and, until such deficiency is restored, the financial institution shall not make any new loans or discounts other than by discounting or purchasing bills of exchange at sight; nor shall any dividend be declared out of the profits of such financial institution. Any financial institution failing to restore its reserve to the required amount within 30 days after the closing of the averaging period in which the deficiency occurs may have its business and assets taken over by the department as provided in Part 7 of Article 1 of this chapter.

§ 7-1-372

A commercial bank may deduct a reasonable collection charge covering its actual expenses from the remittance for any check forwarded to it for collection and remittance as a special collection item and may impose a service charge as authorized by Code Section 44-12-196, relating to when an instrument on which a banking or financial organization is directly liable is presumed abandoned.

§ 7-1-390

One or more natural persons 18 years of age or over may act as incorporators of a bank or trust company.

§ 7-1-390.1

(a) Subject to the requirements and restrictions of this chapter including, but not limited to, deposit insurance requirements where applicable, a bank or trust company may organize as a limited liability company pursuant to Chapter 11 of Title 14.

(b) The department shall have the authority to promulgate rules and regulations in accordance with Code Section 7-1-3 specifying the conditions under which a bank or trust company may organize as a limited liability company.

(c) To the extent the provisions of Chapter 11 of Title 14 are consistent with and not in conflict with the provisions of this chapter and the rules and regulations of the department, such provisions shall apply to a bank or trust company that has organized as a limited liability company.

§ 7-1-391

(a) A bank or trust company shall not pay any fee, compensation, or commission for promotion in connection with its organization or apply any money received on account of shares or subscriptions, selling shares, or other services in connection with its organization, except legal fees, commissions or fees to disinterested third parties for sale of bank stock to others, and other usual and ordinary expenses necessary for its organization.

(b) A majority of incorporators shall file with the department at the time of filing of the articles an affidavit:

(1) Setting forth all expenses incurred or to be incurred in connection with the organization of the bank or trust company, subscription for its shares, and sale of its shares; and

(2) Stating that no fee, compensation, or commission prohibited by subsection (a) of this Code section has been paid or incurred.

(c) In the event of a violation of this Code section the department may disapprove the articles on account of such violation.

§ 7-1-392

(a) The articles of incorporation shall be signed by each of the incorporators and shall set forth in the English language:

(1) The name of the bank or trust company;

(2) The street address and county where the main office will be located;

(3) For institutions chartered after July 1, 1998, the name of the initial registered agent;

(4) The street address where its initial registered office will be located;

(5) A brief statement of the purpose or purposes for which it is incorporated, that it is incorporated under this chapter, and whether it shall be solely a bank, solely a trust company, or both a bank and trust company;

(6) The term for which it is to exist, which shall be perpetual unless otherwise limited;

(7) The aggregate number of shares which the bank or trust company shall have authority to issue, and:

(A) If the shares are to consist of one class only, the par value of each of the shares; or

(B) If the shares are to be divided into classes, the number of shares of each class, the par value of each share of each class, a description of each class, and a statement of the preferences, redemption provisions, qualifications, limitations, restrictions, and the special or relative rights granted to or imposed upon the shares of each class;

(8) The name, place of residence, and post office address of each incorporator;

(9) The name, occupation, citizenship, place of residence, and post office address of each of the first directors, which number shall not be less than five; and

(10) Any provision not inconsistent with law which the incorporators may choose to insert for the regulation of the internal affairs and business of the bank or trust company.

(b) It shall not be necessary to set forth in the articles any of the corporate or operational powers set forth in this chapter.

(c) The incorporators shall file with the department the articles, together with the fee required by Code Section 7-1-862. Such filing shall constitute an application for a certificate of incorporation. Immediately upon the filing of the articles, the department shall certify a copy thereof and return it to the applicants, who shall, in conformity with Code Section 7-1-7 and on the next business day following the filing of the articles, transmit for publication a copy of the articles or, in lieu thereof, a statement in substantially the following form:

“An application for a certificate of incorporation of a (bank, trust company, or bank and trust company) to be known as the __________ and to be located at __________ in __________ County, Georgia, will be made to the Secretary of State of Georgia by (names and addresses of incorporators) in accordance with Chapter 1 of Title 7 of the Official Code of Georgia Annotated, the ‘Financial Institutions Code of Georgia.’ A copy of the articles of incorporation of such proposed (bank, trust company, or bank and trust company) and the application have been filed with the Department of Banking and Finance. The following persons have been proposed as the initial directors: (names and addresses of proposed directors).”

to the newspaper which is the official organ of the county where the main office will be located. The articles or statement must be published once a week for two consecutive weeks with the first publication occurring within ten days of receipt by the newspaper of the articles or statement.

(d) A registered agent shall be named for each financial institution that is a corporation, and each financial institution shall inform the department and the Secretary of State of its current registered agent.

§ 7-1-393

The incorporators shall also file with the department:

(1) Information desired by the department in order to evaluate the proposed institution which shall be made available in the form specified by the department;

(2) The affidavit required by Code Section 7-1-391;

(3) A certificate of the Secretary of State showing that the proposed name of the bank or trust company has been reserved pursuant to Code Section 7-1-131; and

(4) Applicable fees established by regulation of the department to defray the expense of the investigation required by Code Section 7-1-394.

§ 7-1-394

(a) Upon receipt of the articles and the filings and fees from the incorporators as required by Code Section 7-1-393, the department shall conduct such investigation as it may deem necessary to ascertain whether it should approve the proposed bank or trust company. The department shall approve the bank or trust company if and only if it determines in its discretion that:

(1) The articles and supporting items satisfy the requirements of this chapter;

(2) The convenience and needs of the public will be served by the proposed bank or trust company;

(3) There is a reasonable promise of adequate support for the bank or trust company in the light of:

(A) The competition offered by existing banks and trust companies and other financial institutions;

(B) The previous financial history of the community as to banks, trust companies, and other financial institutions;

(C) As to banks, the opportunities for profitable employment of bank funds as indicated by the average demand for credit, the number of potential depositors, the volume of bank transactions, and the businesses and industries of the community with particular regard to their stability, diversification, and size; and

(D) As to trust companies, the opportunities for profitable employment of fiduciary or other representative services;

(4) The character and fitness of the incorporators, of the directors, and of the proposed officers are such as to command the confidence of the community and to warrant the belief that the business of the proposed bank or trust company will be honestly and efficiently conducted;

(5) There has not been any material violation of Code Section 7-1-391, so that approving the articles would, in the opinion of the department, impair the policy manifested by that provision;

(6) The capital structure of the proposed bank or trust company is adequate in relation to the amount and character of the anticipated business of the bank or trust company and the safety of prospective depositors;

(7) In the case of trust companies, the proposed company will have sufficient personnel with adequate knowledge and experience to administer fiduciary accounts;

(8) In the case of trust companies, the incorporators, directors, and proposed officers have satisfactory results from a fingerprint record check report conducted by the Georgia Crime Information Center and the Federal Bureau of Investigation. The department shall be authorized to obtain conviction data with respect to any person who is an incorporator, director, or proposed officer of the proposed trust company. Each incorporator, director, or proposed officer of a trust company shall provide express written consent to the department to conduct the criminal background check and to use all information necessary to run such check, including, but not limited to, a classifiable set of fingerprints. The proposed trust company shall be responsible for all fees associated with the performance of such criminal background check; and

(9) In the case of trust companies, the incorporators, directors, and proposed officers have demonstrated financial responsibility, character, and general fitness. The department shall be authorized to obtain personal history and work experience and other information, including, but not limited to, independent credit reports obtained from a consumer reporting agency described in the federal Fair Credit Reporting Act, 15 U.S.C. Section 1681a(f), with respect to any person who is an incorporator, director, or proposed officer of the proposed trust company.

(b) Within 90 days after receipt of the articles and the filings and fees from the incorporators as required by Code Section 7-1-393, the department shall approve or disapprove the proposed bank or trust company. In giving approval, the department may impose conditions to be satisfied prior to the issuance of a permit to do business under Code Section 7-1-396. If the department, in its discretion, shall approve the proposed bank or trust company with or without conditions, it shall deliver its written approval of the articles to the Secretary of State and notify the incorporators of its action, provided that if the approval of a federal public body is also required with respect to the bank or trust company, then the department may, at its option, withhold its written approval from the Secretary of State until such approval is given and may, at its option, withdraw its approval if the federal public body refuses to grant its approval to the bank or trust company. If the department, in its discretion, shall disapprove the proposed bank or trust company, it shall notify the incorporators of its disapproval and state generally the unfavorable factors influencing its decision. The decision of the department shall be conclusive, except that it may be subject to judicial review as provided in Code Section 7-1-90.

(b.1) The procedure and criteria used in the review of a request to establish an additional banking location pursuant to Code Sections 7-1-601 and 7-1-602 may be streamlined and abbreviated as provided by departmental rule, regulation, or written policy.

(c) Nothing contained in this Code section, Code Section 7-1-608, or Code Section 7-1-622 shall limit the authority of the department to approve the organization of a special purpose bank or trust company which does not do a general banking business with the public but is organized for the purpose of conducting a limited banking business which facilitates the economic, commercial, or export-import trade growth of this state. The department may establish, by rule or by condition to its approval of articles of incorporation of any special bank or of any credit card bank incorporated under the provisions of Chapter 5 of this title, such special provisions concerning distribution of ownership, composition of the board of directors, bylaws, or the conduct of corporate affairs for any such special purpose bank or credit card bank incorporated under the provisions of Chapter 5 of this title as it determines to be consistent with the special nature of such charters and their efficient operation and safe and sound banking practice; provided, however, that in no event shall fewer than a majority of the directors of such special purpose bank or credit card bank be residents of this state.

(d) The department may utilize in its investigation process such reports from other bank supervisory agencies as are pertinent to the requirements of state law.

§ 7-1-395

If the Secretary of State shall receive, with respect to the proposed bank or trust company:

(1) The written approval of the department with a copy of the articles of incorporation attached;

(2) An affidavit executed by the duly authorized agent or publisher of the newspaper in which publication of the articles or a summary statement relating thereto is required by Code Sections 7-1-7 and 7-1-392 stating that the articles or the summary statement have been published as required by those Code sections;

(3) All fees and charges required by law and if, in addition, the name of the proposed bank or trust company continues to be reserved or is available,

the Secretary of State shall immediately issue to the incorporators a certificate of incorporation. The Secretary of State shall retain on file in his office a copy of the certificate, the articles, the department's approval, and the publisher's certificate.

§ 7-1-396

(a) As of the issuance of the certificate of incorporation by the Secretary of State, the corporate existence of the bank or trust company shall begin and those persons who subscribed for shares prior to filing of the articles, or their assignees, shall be shareholders in the bank or trust company; provided, nevertheless, that the department shall have full authority to regulate and supervise the activities of promoters, incorporators, initially named directors, subscribers for shares, and all persons soliciting offers to subscribe for shares in any bank in formation under this chapter even though the corporate existence of the bank may not have officially begun and the bank in formation shall be considered a “bank” for those purposes. Persons named in the articles of incorporation and approved by the department as initial directors of the bank in formation shall not be considered agents or broker-dealers within the meaning of paragraphs (1) and (3) of Code Section 10-5-2.

(b) The certificate of incorporation shall be conclusive evidence of the fact that the bank or trust company has been incorporated; but proceedings may be instituted by the state to dissolve, wind up, and terminate a bank or trust company in accordance with Code Section 7-1-92 and other applicable provisions of this chapter.

(c) Until receipt of a permit to begin business issued by the department, a bank or trust company shall not transact any business except such business as is incident to its organization or to the obtaining of subscriptions and payment for its shares and other securities.

(d) The department shall issue to a bank or trust company a permit to begin business when:

(1) Capital stock of the bank or trust company shall have been fully paid in, in cash, and in no event in an amount less than the minimum capital stock for banks or trust companies under Code Section 7-1-410, and, in addition, there shall have been paid in:

(A) Paid-in capital in an amount not less than 20 percent of the capital stock; and

(B) The proceeds of subordinated securities, if any, which were considered part of the capital structure of the bank or trust company by the department under Code Section 7-1-419 in giving its approval of the proposed institution;

(2) All of the directors have taken the oath or affirmation required by Code Section 7-1-484;

(3) The bylaws of the bank or trust company have been filed with the department;

(4) The bank or trust company has designated its registered agent and registered office pursuant to Code Section 7-1-132;

(5) The bank or trust company has been organized and is ready to begin the business for which it was incorporated;

(6) All conditions imposed by the department in giving its approval of the proposed bank or trust company under Code Section 7-1-394 have been satisfied; and

(7) The department has received an affidavit signed by the president or secretary and by at least a majority of the directors of the bank or trust company to the effect that all of the foregoing requirements of this subsection have been satisfied.

§ 7-1-397

(a) After the issuance of the certificate of incorporation by the Secretary of State, a first meeting of the shareholders may be held within this state at the call of the shareholders who were the incorporators, or a majority of them, for the purpose of adopting bylaws or for such other purposes as shall be stated in the notice of the meeting.

(b) After the issuance of the certificate of incorporation by the Secretary of State, an organizational meeting of the board of directors named in the articles shall be held within this state at the call of a majority of the directors for the purpose of adopting bylaws and of electing officers and for transaction of such other business as may come before the meeting. The directors who call the meeting shall give to each director named in the articles at least three days' written notice of the meeting.

§ 7-1-398

Incorporators and other persons who organize a bank or trust company which transacts business before its capital stock and paid-in capital have been paid in shall be jointly and severally liable to depositors and other creditors to make good the amounts not paid in by subscribers or otherwise deficient. Such liability shall be deemed as an asset of the bank or trust company and may be enforced by it, its successors or assignees, or by a shareholder suing derivatively, or by a receiver appointed under this chapter.

§ 7-1-410

(a) Except as provided in subsections (b) and (c) of this Code section, the minimum capital stock of a de novo bank or trust company shall be $3 million. An established bank or trust company no longer in de novo status shall maintain a minimum capital stock of $3 million or such greater amount as the department may require based on a proportion of capital to total assets.

(b) A de novo bank or trust company whose main office is located in a county with a population of less than 200,000, according to the last official United States census, shall have a minimum capital stock of $2 million. An established bank or trust company located in such county shall maintain a minimum capital stock of $2 million or such greater amount as the department may require based on a proportion of capital to total assets.

(c) A bank or trust company existing on July 1, 1989, with a capital stock of less than that required by subsections (a) and (b) of this Code section shall not be required to increase its capital stock above the amount outstanding on July 1, 1989, except as otherwise provided by law.

§ 7-1-413

A bank or trust company may have one or more classes of common or preferred shares, all of which shall be shares with par value of not less than $1.00 and any or all of which may, subject to the restrictions of this chapter, consist of shares with full, limited, multiple, fractional, or no voting rights and such designations, preferences, qualifications, privileges, limitations, redemption provisions (in the case of preferred shares), options, conversion rights, and other special rights as shall be stated in the articles. Except as otherwise stated in the articles, this chapter, or other applicable laws, each share shall be equal in all respects to every other share.

§ 7-1-414

(a) Any preferred shares subject to redemption shall be redeemable only pro rata or by lot or by such other equitable method as is selected by the board of directors, except as otherwise provided in the articles.

(b) With the written approval of the department and the votes of directors and shareholders required to authorize an increase in the capital stock of the institution under Code Section 7-1-511:

(1) Preferred stock may be convertible to common stock; and

(2) Subordinated securities may be convertible to common stock.

(c) With the written approval of the department and a resolution of the board of directors, a bank or trust company may acquire issued shares of its own common stock, which will then be considered treasury shares. The department shall consider whether the acquisition has a legitimate corporate purpose, whether any capital impairment would result, and whether the price of the shares reflects fair market value.

§ 7-1-415

(a) Except as provided in subsection (b) of this Code section and in the case of a distribution of shares under subsection (e) of Code Section 7-1-488 or incident to a merger, consolidation, or other corporate reorganization or rehabilitation authorized by this chapter, shares of a bank or trust company may be issued only for cash in an amount which shall be at least the aggregate par value of the share, unless otherwise approved by the department with the demonstration of good cause.

(b) Where a bank or trust company issues shares in exchange for or in order to convert other shares or obligations which have been issued by it, the consideration for such shares shall be:

(1) The cash originally received for the shares or obligations surrendered or converted;

(2) The additional cash received incident to the exchange or conversion;

(3) The other amounts, if any, transferred to capital stock incident to the exchange or conversion.

In any such case the consideration shall be not less than the minimum amount specified in subsection (a) of this Code section. Any amount by which capital stock may be reduced upon an exchange or conversion shall be transferred to paid-in capital.

§ 7-1-416

(a) Unless more restrictive procedures are stated in the articles, the board of directors may, by resolution duly adopted, issue from time to time, in whole or in part, common or preferred shares authorized by the articles.

(b) With the consent of the department, a bank or trust company may withdraw any offer to sell its common or preferred shares, whether issued pursuant to its articles or pursuant to subsection (a) of this Code section; and such shares may be held as authorized shares subject to future issuance in accordance with subsection (a) of this Code section.

(c) A bank or trust company may not, directly or indirectly, extend credit for the purpose of financing the original purchase of capital stock or capital debt issued by it or by a bank holding company to which it is affiliated.

§ 7-1-417

(a) A bank or trust company shall not deliver any share certificate until the share or shares represented thereby are fully paid. Each subscriber, upon payment in full for his shares, shall be entitled to a certificate or certificates certifying the number of shares owned by him in the bank or trust company.

(b) Unless otherwise provided in the articles or the bylaws, the shares of a bank or trust company shall be represented by certificates signed by the president or a vice-president and the secretary or an assistant secretary of the bank or trust company and may be sealed with the seal of the bank or trust company or a facsimile thereof. The signatures of such officers upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the bank or trust company itself or any employee of the bank or trust company.

(1) The name of the bank or trust company;

(2) That the bank or trust company is organized under the laws of this state;

(3) The name or names of the person or persons to whom issued;

(4) The number and class of shares such certificate represents;

(5) The par value of each share represented by such certificate;

(6) If the shares represented thereby are nonvoting shares, a statement or notation to that effect; and

(7) If the shares represented thereby are subordinate to shares of any other class with respect to dividends or amounts payable on liquidation, a brief statement to that effect.

(d) Each certificate representing shares issued by a bank or trust company which is authorized to issue shares of more than one class shall set forth or fairly summarize upon the face or back of the certificate, or shall state that the bank or trust company will furnish to any shareholder upon request and without charge, a full statement of the designations, preferences, limitations, and relative rights of the shares of each class authorized to be issued.

(e) In the event of a change in the capital structure of a corporation, it shall not be necessary to recall any previously issued share certificate for either the addition or deletion of the statement required by paragraph (7) of subsection (c) of this Code section to be set forth upon the face of such certificate or for revision of the information placed upon the face or back of the certificate pursuant to subsection (d) of this Code section.

(f) The signatures of the officers of a bank or trust company and the seal of the bank or trust company upon any bond, debenture, or other debt security issued by the bank or trust company may be facsimiles if the instrument is authenticated or countersigned by a trustee or transfer agent, or registered by a registrar, other than the bank or trust company itself or any employee of the bank or trust company.

(g) In case any officer who has signed or whose facsimile signature has been placed upon a share certificate or upon a bond, debenture, or other debt security as provided in this Code section shall have ceased for any reason to be such officer before such certificate or instrument is issued, it may be issued by the bank or trust company with the same effect as if he were such officer at the date of its issue.

(h) Nothing in this Code section shall be construed to invalidate any share certificate validly issued and outstanding on April 1, 1975.

§ 7-1-418

(a) A bank or trust company may, but shall not be obliged to, issue certificates for fractional shares in order to effect share transfers, share distributions or reclassifications, mergers, consolidations, or reorganizations which shall entitle the holder, in proportion to his fractional holdings, to exercise voting rights, to receive dividends thereon, and to participate in any of the assets of the bank or trust company in the event of liquidation.

(b) As an alternative, a bank or trust company may pay in cash the fair value of fractional shares as determined by the board of directors as of a time fixed by the board. In the absence of bad faith, all acts of the board pursuant to this subsection shall be conclusive.

(c) As an alternative, the board of directors may issue scrip in registered or bearer form over the manual or facsimile signature of an officer of the bank or trust company or of its agent, exchangeable as therein provided for full shares; but such scrip shall not entitle the holder to any rights of a shareholder except as therein provided. The board of directors may cause such scrip to be issued subject to the condition that it shall become void if not exchanged for certificates representing full shares before a specified date, or subject to the condition that the shares for which such scrip is exchangeable may be sold by the bank or trust company and the proceeds thereof distributed to the holders of such scrip, or subject to any other conditions which the board of directors may deem advisable. If a bank or trust company issues scrip, it shall provide reasonable opportunity for persons entitled thereto to sell such scrip or to purchase such additional scrip as may be needed to acquire a full share.

(d) A corporation may provide reasonable opportunity for persons entitled to fractional shares to sell such fractional shares or to purchase such additional fractional shares as may be needed to acquire a full share, or may sell fractional shares or scrip for the account of such persons.

§ 7-1-419

(a) A bank or trust company may issue notes, debentures, or other obligations in the form of “subordinated securities,” provided that they:

(1) Are subordinated in right of payment, in the event of insolvency or liquidation of the bank or trust company, to the prior payment of all deposits of the bank or trust company and of all claims of other creditors of the bank or trust company except the holders of securities on a parity therewith and the holders of securities expressly subordinated thereto;

(2) Are authorized by the same votes of directors as those required for authorization of an increase in capital stock or any instrument convertible into capital stock of the bank or trust company;

(3) Contain provisions for amortization, serial maturities, transfers to a sinking fund, allocation of reserves, or other provisions sufficient to pay or to have paid at maturity all amounts due thereon;

(4) Furnish disclosures to investors of the risks associated with the subordinated securities prior to investment; and

(5) Include notice that, if the bank or trust company becomes subject to a regulatory action, then the bank or trust company may be prohibited from paying or retiring the subordinated securities.

(b) The aggregate amount of the obligations of a bank or trust company in the form of subordinated securities shall at no time exceed 50 percent of the sum of the unimpaired capital stock and unimpaired paid-in capital of the bank or the trust company.

(c) If at or after the payment or retirement of the subordinated securities of a bank or trust company there is or would be a deficiency in the capital stock of the bank or trust company, such fact shall be reported to the department in advance of the payment or retirement. The department may, upon receipt of such report, order a restoration of capital stock or take other appropriate remedial measures under this chapter.

(d) Subordinated securities shall not be considered in determining the amount of ad valorem taxes payable by the bank or trust company.

§ 7-1-430

(a) Except as otherwise provided in this Code section, a holder of or subscriber to shares of a bank or trust company shall be under no obligation to the bank or trust company or its creditors with respect to such shares or subscription other than the obligation to pay the full consideration remaining due to the company upon such shares or subscription. Such obligation may be enforced by the bank or trust company and its successors or assigns, or by a shareholder suing derivatively, or by a receiver appointed under this chapter.

(b) Every subscriber for shares not fully paid and every original holder of shares not fully paid which were issued contrary to Code Section 7-1-417 and every transferee or assignee of a subscription for shares or of shares with knowledge or notice that the shares are not fully paid and were issued contrary to Code Section 7-1-417 shall continue personally liable thereon as provided in subsection (a) of this Code section, notwithstanding any transfer or assignment of such shares or subscription for such shares.

(c) Any person becoming a transferee or assignee of shares or of a subscription for shares in good faith and without knowledge or notice that the full consideration therefor has not been paid shall not be personally liable thereon for any unpaid portion of such consideration.

(d) An executor, administrator, conservator, guardian, trustee, assignee for the benefit of creditors, receiver, or other fiduciary shall not be personally liable to the bank or trust company or its creditors as a holder of or subscriber for its shares; but the estate and funds in his hands or under his control shall be so liable. Nothing in the foregoing shall relieve any fiduciary from liability for a breach of trust.

(e) No bailee or nominee and no pledgee or other holder of shares as collateral security shall be personally liable as a shareholder, but the bailor or real party in interest or pledgor or other person transferring such shares as collateral shall be considered the holder thereof for purposes of liability under this Code section.

(f) No liability under this Code section shall be asserted against a subscriber or shareholder more than six years after the date on which the shares for which payment is sought were to have been fully paid pursuant to the contract of sale or subscription agreement or, if no such date is provided for in the contract of sale or subscription agreement, more than six years from the date of the contract of sale or subscription agreement, whether or not such contract or agreement is under seal.

(g) The subscription agreement or contract of sale may prescribe other penalties for failure to make payments when due; but no penalty working a forfeiture of a subscription, or of the amounts paid thereon, shall be declared as against any subscriber unless the amount due thereon shall remain unpaid for a period of 20 days after written demand has been made therefor. The delinquent subscriber or his legal representative shall be entitled to be paid the excess of the sale proceeds realized from the sale by the bank or trust company of such subscribed shares over the sum of:

(1) The amount due and unpaid on the subscription; and

(2) The reasonable expenses incurred in selling the shares;

but in no event shall the delinquent subscriber or his legal representative be entitled to be paid an amount greater than the amount paid by said subscriber on his subscription.

(h) The board of directors shall have power to compromise, on such terms and conditions as the board may prescribe, any claim, dispute, or action arising out of a subscription for shares when in the judgment of the board it is in the best interests of the bank or trust company to do so.

§ 7-1-431

(a) Except as provided in subsection (b) of this Code section or in the articles, a bank or trust company shall issue shares, option rights, or securities having conversion or option rights by first offering them to shareholders of the same class in proportion to their holdings of shares of such class.

(b) Except as provided in the articles, there shall be no preemptive right to:

(1) Shares issued as a share dividend;

(2) Fractional shares;

(3) Shares issued pursuant to share plans authorized by subsection (e) of Code Section 7-1-488;

(4) Shares issued pursuant to acquisition of substantially all of the assets of another bank or trust company;

(5) Shares released by waiver from their preemptive right by the affirmative vote or written consent of the holders of two-thirds of the shares of the class to be issued. Any such vote or consent shall be binding on all shareholders and their transferees for the time specified in such vote or consent up to but not exceeding one year from the date thereof and shall protect the bank or trust company, its management, and all persons who may within such time acquire the shares so released;

(6) Shares which have been offered to shareholders to satisfy their preemptive right but not purchased by them within the prescribed time and which are thereafter issued or sold to any other person or persons at a price not less than the price at which they were offered to such shareholders.

(c) Unless otherwise provided in the articles, no holder of shares of any class shall have any preemptive right with respect to shares of any other class which may be issued or sold by the bank or trust company.

(d) Nothing in this Code section shall impair any cause of action or remedy which any shareholder may have for a breach of duty by the board of directors relating to the sale or other disposition by the bank or trust company of shares or securities not subject to the preemptive rights under this Code section or under the articles.

(e) The holders of shares entitled to the preemptive rights shall be given prompt notice setting forth the time within which and the terms and conditions upon which such shareholders may exercise their preemptive rights. Such notice shall be given at least 30 days prior to the expiration of the period during which the rights may be exercised.

§ 7-1-432

(a)(1) Except as provided in paragraph (3) of this subsection, meetings of the shareholders of a bank or trust company shall be held in person at such place within or without the state as shall be fixed by the bylaws or by the board of directors pursuant to the bylaws or, if not so fixed, at the main office of the bank or trust company.

(2) Shareholders may participate and vote remotely at meetings of the shareholders if the bylaws of the bank or trust company explicitly provide an option for remote participation and voting. If the bylaws so provide, the board of directors shall:

(A) Implement reasonable measures to:

(i) Provide shareholders a reasonable opportunity to remotely participate in such meetings. Such measures may include, but are not limited to, audio webcast or other broadcast of the meeting but, in every instance, shall provide shareholders the ability to communicate substantially concurrently with the proceedings;

(ii) Enable shareholders to vote or grant proxies at such meetings by means of electronic communication. Such measures may include, but are not limited to, telephonic or internet voting; and

(iii) Verify that each person deemed present and permitted to vote remotely is a shareholder of record in order to ensure the integrity of the vote;

(B) Provide the option for remote participation and voting at no cost to shareholders; and

(C) Keep a record of remote attendance by shareholders and any vote or other action taken by a shareholder participating remotely.

(3) In the event of a proclaimed emergency pursuant to Code Section 7-1-111, the board of directors may apply to the department for authorization to conduct a meeting of the shareholders solely through remote participation. If such application is approved by the department, the board of directors shall comply with the requirements in paragraph (2) of this subsection.

(b) There shall be at least one meeting of the shareholders in each calendar year for the election of directors. In addition, any matter relating to the bank or trust company, whether or not stated in the notice of meeting, may be brought up for action, except matters which this chapter requires to be stated in the notice of meeting. The time of such annual meeting shall be fixed by the bylaws or by the board of directors pursuant to the bylaws. If the annual meeting shall not be called and held during any calendar year, the principal court may, after notice to the bank or trust company, order a substitute annual meeting to be held upon the application of any shareholder. The principal court may issue such orders as may be appropriate, including, without limitation, orders designating the time and place of such meeting, the record date for determination of shareholders entitled to vote, and the form of notice of such meeting.

(c) Special meetings of the shareholders or a special meeting in lieu of the annual meeting of the shareholders may be called by the president, the chairman of the board of directors, the board of directors, or such other officers or persons as may be provided in the articles or bylaws or, in the event there are no officers or directors, then by any shareholder. Special meetings of the shareholders or a special meeting in lieu of the annual meeting of the shareholders shall be called by the bank or trust company upon the written request of the holders of not less than 25 percent of the outstanding shares of the bank or trust company entitled to vote in an election of directors.

(d) Notice of annual and special meetings shall be given to shareholders of record pursuant to Code Section 7-1-6. But when a meeting is adjourned to another time or place, it shall not be necessary, unless the bylaws require otherwise, to give any notice of the adjourned meeting if the time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken; and at the adjourned meeting any business may be transacted that might have been transacted on the original date of the meeting. If, however, after the adjournment the board fixes a new record date for the adjourned meeting, a notice of the adjourned meeting shall be given each shareholder of record on the new record date entitled to vote at such meeting.

(e) Any action required by this chapter to be taken at a meeting of the shareholders of a bank or trust company, or any action which may be taken at a meeting of the shareholders, may be taken without a meeting if written consent setting forth the action so taken shall be signed by all the shareholders entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote of shareholders and may be stated as such in any articles or document filed with the Secretary of State or the department under this chapter.

§ 7-1-433

(a) For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board of directors of a bank or trust company may provide that the stock transfer books shall be closed for a stated period not to exceed, in any case, 70 days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting.

(b) In lieu of closing the stock transfer books, the bylaws or, in the absence of an applicable bylaw, the board of directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than 70 days and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action requiring such determination of shareholders is to be taken.

(c) If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed, or the date on which the resolution of the board of directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of stockholders.

(d) When a determination of shareholders entitled to vote at any meeting of shareholders has been made, as provided in this Code section, such determination shall apply to any adjournment thereof, unless the board of directors fixes a new record date under this Code section for the adjourned meeting.

§ 7-1-434

(a) The officer or agent having charge of the stock transfer books for shares of a bank or trust company shall make a complete list of the shareholders entitled to vote at a meeting of shareholders or any adjournment thereof, arranged in alphabetical order, showing the address of each shareholder and the number and class, if any, of shares held by each shareholder. Such list shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting for the purposes thereof. Such list shall be prima-facie evidence of who is a shareholder of record; but, in the event of challenge, the record of shareholders required by Code Section 7-1-439 shall control.

(b) If the requirements of this Code section have not been substantially complied with, the meeting shall, on the demand of any shareholder in person or by proxy, be adjourned until the requirements are complied with.

(c) If no such demand is made, failure to comply with the requirements of this Code section shall not affect the validity of any action taken at such meeting.

(d) Notwithstanding subsections (a) through (c) of this Code section, it shall not be necessary to prepare or produce a list of shareholders in any case where the record of shareholders is presented and readily shows, in alphabetical order or by alphabetical index and by classes, if any, the names of the shareholders entitled to vote, with the address of and the number of shares held by each.

§ 7-1-435

(a) Except as provided in subsection (d) of this Code section or the articles or in bylaws adopted by the shareholders, a majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders.

(b) If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, unless the vote of a greater number, or voting by classes, is required by this chapter, or the articles, or bylaws.

(c) When a quorum is once present to organize a meeting, the shareholders present may continue to do business at the meeting or at any adjournment thereof, notwithstanding the withdrawal of enough shareholders to leave less than a quorum.

(d) If a meeting cannot be organized for lack of a quorum, those present may adjourn the meeting to such time and place as they may determine. In the case of a meeting for the election of directors which is twice adjourned for lack of a quorum, those present at the second of such adjourned meetings, of which notice has been given in writing to shareholders pursuant to Code Section 7-1-6, shall constitute a quorum for the election of directors without regard to the other quorum requirements of this Code section, the articles, or bylaws.

§ 7-1-436

(a) Unless otherwise provided in the articles, each outstanding share entitled to vote, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders. A subscriber shall not be entitled to vote the share subscribed for until such shares have been fully paid.

(b) Treasury shares shall not be voted at any meeting nor counted in determining the total number of outstanding shares at any given time.

(c) The chairman of the board, chief executive officer, president, any vice-president, the secretary, or the treasurer of a corporation which is the holder of record of shares of a bank or trust company shall be deemed by the bank or trust company to have authority to vote such shares and to execute proxies and written waivers and consents in relation thereto, whether such shares are held in a fiduciary capacity or otherwise, unless, before a vote is taken or a waiver of consent is acted upon, it is made to appear by a certified copy of the bylaws or resolution of the board of directors or executive committee of the corporation holding such shares that such authority does not exist or is vested in some other officer or person. In the absence of such certification, a person executing any such proxies, waivers, or consents or presenting himself or herself at a meeting as one of such officers of a corporate shareholder shall, for the purposes of this Code section, be prima facie deemed to be duly elected, qualified, and acting as such officer and to be fully authorized; and, in the case of conflicting representation, the corporate shareholder shall be deemed to be represented by its senior officer in the order first stated in this subsection.

(d) Shares held by an administrator, executor, guardian, or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy; but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name or the name of his nominee. Shares standing in the name of a person as life tenant may be voted by him, either in person or by proxy, unless the record of shareholders shows that he is not entitled to vote such shares.

(e) Shares standing in the name of a receiver may be voted by such receiver; and shares held by or under the control of a receiver may be voted by such receiver without a transfer thereof into his name if authority to do so is contained in an order of the court by which such receiver was appointed.

(f) If a share or shares stand of record in the names of two or more persons, whether fiduciaries, joint tenants, tenants in common, tenants in partnership, or otherwise, or if two or more persons have the same fiduciary relationship respecting the same share or shares, then unless the instrument or order appointing them or creating the tenancy otherwise directs and such instrument or order or a copy thereof is filed with the secretary of the bank or trust company, their acts with respect to voting shall have the following effect:

(1) If only one votes, in person or by proxy, his act binds all;

(2) If more than one votes, in person or by proxy, the act of the majority so voting binds all;

(3) If more than one votes in person or by proxy but the votes are evenly split on any particular matter, each faction is entitled to vote the share or shares in question proportionally;

(4) If the instrument or order so filed shows that any such tenancy is held in unequal interest, a majority or even-split for purposes of this subsection shall be a majority or even-split in interest;

(5) The principles of this subsection shall apply, insofar as possible, to execution of proxies, waivers, consents, or objections and for the purpose of ascertaining the presence of a quorum.

(g) A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, or a nominee of the pledgee; and thereafter the pledgee or his nominee shall be entitled to vote the shares so transferred.

(h) Notwithstanding subsections (a) through (g) of this Code section, a corporation shall be protected from liability in relying on and treating the persons in whose names shares stand on the record of shareholders as the owners thereof for all purposes.

(i) When notice of redemption of redeemable shares has been mailed to the holders thereof and a sum sufficient to redeem such shares has been set aside to pay the redemption price to shareholders, such shares shall not be entitled to vote in any manner and shall not be deemed to be outstanding shares.

§ 7-1-437

(a) Unless otherwise unlawful, a person or corporation who is entitled to attend a shareholders' meeting, to vote thereat, or to execute consents, waivers, or releases may be represented at such meeting or vote thereat, and execute consents, waivers, and releases, and exercise any of his or her other rights, by one or more agents, who may be either an individual or individuals or any domestic or foreign corporation, authorized by a written proxy or electronic transmission of proxy executed by such person or by his or her attorney in fact.

(b) No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the person executing it, except as otherwise provided in this Code section.

(c) Subject to the limitation of subsection (b) of this Code section, any proxy duly executed is not revoked and continues in full force and effect until an instrument revoking it, or a duly executed proxy bearing a later date, is received by the secretary of the bank or trust company. A proxy is not revoked by the death or incapacity of the maker unless, before the vote is counted or the authority is exercised, written notice of such death or incapacity is received by the secretary of the bank or trust company. Notwithstanding that a valid proxy is outstanding, the powers of the proxyholder are suspended, except in the case of a valid proxy which is by law irrevocable and which states on its face that it is irrevocable, if the maker is present at the meeting and elects to vote in person.

(d) If a proxy for the same shares confers authority upon two or more persons and does not otherwise provide, a majority of them present at the meeting or, if only one is present, then that one may exercise all the powers conferred by the proxy; but, if the proxyholders present at the meeting are divided as to the right and manner of voting in any particular case and there is no majority, the voting of said shares shall be prorated.

(e) If a proxy expressly provides, any proxyholder may, unless otherwise unlawful, appoint in writing a substitute to act in his or her place.

(f) A shareholder shall not sell his or her vote or issue a proxy to vote to any person for any sum of money or anything of value, except as permitted in this Code section and in Code Section 7-1-438, relating to shareholders' agreements.

(g) To be irrevocable, a proxy must be entitled “IRREVOCABLE PROXY,” must state that it is irrevocable, must not otherwise be unlawful, and must be held by any of the following or by a nominee of any of the following:

(1) A pledge or other person holding a security interest in the shares;

(2) A person who has purchased or agreed to purchase the shares;

(3) A creditor or creditors of the bank or trust company who extend or continue credit to the bank or trust company in consideration of the proxy, if the proxy states that it was given in consideration of such extension or continuation of credit, the amounts thereof, and the name of the person extending or continuing credit;

(4) A person who has contracted to perform services as an officer of the bank or trust company, if a proxy is required by the contract of employment and if the proxy states that it was given in consideration of such contract of employment, the name of the employee, and the period of employment contracted for;

(5) A person designated by or under an agreement under Code Section 7-1-438, relating to shareholders' agreements.

(h) Notwithstanding a provision in a proxy stating that it is irrevocable, the proxy becomes revocable after the pledge or security interest is redeemed, or the debt of the bank or trust company is paid, or the period of employment provided for in the contract of employment has terminated, or the agreement under Code Section 7-1-438, relating to shareholders' agreements, has terminated; and, in a case provided for in paragraph (3) or (4) of subsection (g) of this Code section, a proxy becomes revocable three years after the date of the proxy or at the end of the period, if any, specified therein, whichever period is less, unless the period of irrevocability is renewed from time to time by the execution of a new irrevocable proxy as provided in this Code section. This subsection does not affect the duration of a proxy under subsection (b) of this Code section.

(i) A proxy may be revoked, notwithstanding a provision making it irrevocable, by a purchaser of shares without knowledge of the existence of the provision unless the existence of the proxy and its irrevocability are noted conspicuously on the face or back of the certificate representing such shares.

§ 7-1-438

(a) Unless otherwise unlawful, an agreement between two or more shareholders, if in writing and signed by the parties thereto and if a copy thereof is delivered to the department and approved by the department when, in its discretion, such agreement is in the best interest of the bank and the public, may provide that in exercising any voting rights the shares held by them shall be voted as therein provided, or as they may agree, or as determined in accordance with a procedure agreed upon by them. Nothing herein shall impair the right of the bank or trust company to treat the shareholders of record as entitled to vote the shares standing in their names.

(b) The duration of any agreement permitted by subsection (a) of this Code section shall not exceed 20 years. Failure to state a period of duration or stating a period of duration in excess of 20 years shall not invalidate the agreement, but in either such case the period of duration of the agreement shall be 20 years. Any such agreement shall be renewable at any time before the expiration of such 20 year period by agreement of all the shareholders bound thereby at the date of renewal.

(c) A transferee of shares in a bank or trust company whose shareholders have entered into an agreement authorized by subsection (a) of this Code section shall be bound by such agreement or any renewal of such agreement authorized by subsection (b) of this Code section if he takes the shares with notice thereof. A transferee shall be deemed to have notice of any such agreement or any renewal if the existence thereof is noted on the face or back of the certificate or certificates representing such shares.

§ 7-1-439

(a) Each bank and trust company shall keep correct and complete books and records of account and shall keep minutes of the proceedings of its shareholders, board of directors, and committees of directors; and each bank and trust company shall keep at its registered office or main office or at the office of its transfer agent or registrar a record of its shareholders, giving the names and addresses of all shareholders and the number, class, and series, if any, of the shares held by each.

(b) The department may, by regulation, prescribe the minimum disclosure of corporate records and reports which must be made by the bank or trust company to its shareholders at each annual meeting. In issuing such regulations, the department shall consider the legitimate rights of a shareholder to sufficient information to evaluate the management and use of his investment and to elect qualified directors for the bank or trust company as well as the rights of customers of the bank or trust company to maintain the confidentiality of their business affairs.

(c) Nothing in this Code section shall impair the power of any court of competent jurisdiction, upon proof by a shareholder of proper purpose, irrespective of the period of time during which such shareholder shall have been a shareholder of record and irrespective of the number of shares held by him, to compel the production or examination by such shareholder of the books and records of account, minutes, and record of shareholders of a bank or trust company.

§ 7-1-440

A derivative action may be brought by a shareholder in the right of the bank or trust company to procure a judgment in its favor against directors, officers, or other representatives of the bank or trust company, or shareholders, or third parties, or any combination thereof, whenever the bank or trust company has a claim or cause of action which the representatives of the bank or trust company, in violation of their duties, have failed to enforce, including a claim or cause of action against such representatives for their failure in this respect.

§ 7-1-441

(a) In a derivative action involving a right which a bank or trust company may have properly asserted, but which its representatives wrongfully failed to enforce that has been brought by one or more shareholders of a bank or trust company to procure a judgment in its favor, the complaint shall be verified and shall allege that the plaintiff is a shareholder of record at the time of bringing the action. It shall further allege:

(1) That the plaintiff had purchased his or her shares or was a shareholder of record at the time of the transaction of which he or she complains or that his or her shares thereafter devolved on him or her through one or more transfers by operation of law from one who was a holder of record or member at such time; or

(2) That the plaintiff is the holder of record of shares which at the time of the transaction of which he or she complains were held of record by a trustee of a trust in which the plaintiff held a beneficial interest or in which a beneficial interest was held by one from whom the shares have devolved upon the plaintiff through one or more transfers by operation of law.

(b) In any such action the complaint shall also allege with particularity the efforts of the plaintiff to secure the initiation of such action by the board of directors or comparable authority, or the reasons for not making such effort.

(c) Such action shall not be discontinued, compromised, or settled without the approval of the court having jurisdiction of the action. If the court shall determine that the interests of the members or of the shareholders of any class or classes will be substantially affected by such discontinuance, compromise, or settlement, the court shall direct that notice, by publication or otherwise, of the action and the proposed discontinuance, compromise, or settlement thereof be given to the members or to the shareholders of the class or classes whose interests it determines will be so affected; if notice is so directed to be given, the court may determine which one or more of the parties to the action shall bear the expense of giving the same in such amount as the court shall determine and find to be reasonable in the circumstances.

(d) If such action is successful, in whole or in part, or if anything is received by the plaintiff or plaintiffs as the result of the judgment or compromise or settlement of the action, the court may award the plaintiff or plaintiffs reasonable expenses, including reasonable fees of attorneys, and shall direct him or them to account to the bank or trust company for the remainder of the proceeds so received by him or them.

(e) In any such action, the court having jurisdiction, upon final judgment and a finding that the action was brought without reasonable cause, may require the plaintiff or plaintiffs to pay to the parties named as defendants the reasonable expenses, including fees of attorneys, incurred by them in the defense of such action; and such damages as the court may assess shall be paid to the bank or trust company for damages such bank or trust company may have sustained due to adverse publicity brought about as a result of action brought without reasonable cause.

§ 7-1-460

(a) The board of directors of a bank or trust company may, from time to time, declare and the bank or trust company thereupon shall pay dividends on its outstanding shares in cash, property, or its own shares, except when the bank or trust company is insolvent or when the payment thereof would render the bank or trust company insolvent or when the declaration or payment thereof would be contrary to any restrictions contained in the articles, and subject to the following provisions:

(1) Dividends may be declared and paid in cash or property only out of the retained earnings of the bank or trust company unless otherwise approved in advance by the department on terms consistent with standards of safety and soundness;

(2) The department may approve the payment of dividends by a bank or trust company, prior to the time such bank or trust company achieves cumulative profitability:

(A) For the purpose of providing the shareholders of a Subchapter S bank with a source of funds to pay federal and state income taxes on the Subchapter S bank's income that is taxable to those shareholders; or

(B) If a bank or trust company is profitable on an annual basis and the payment of such dividend is consistent with standards of safety and soundness;

(3) Dividends may not be paid without the prior approval of the department in excess of specified amounts as may be fixed by regulations of the department to assure that banks and trust companies maintain an adequate capital structure;

(4) Dividends may be declared and paid in lawfully held treasury shares or in authorized but unissued shares, provided that, in the case of a dividend of authorized but previously unissued shares, there shall be transferred to capital stock an amount equal to the aggregate par value of the shares distributed; and

(5) No dividends payable in shares of any class shall be paid in respect to shares of any other class unless the articles so provide or unless such payment is authorized by the affirmative vote or the written consent of the holders of a majority of the outstanding shares of the class in which the payment is to be made.

(b) A split or division of the issued shares of any class into a greater number of shares of the same class without increasing the capital stock of the bank or trust company shall not be construed to be a share dividend within the meaning of this Code section.

(c) If a bank or trust company has declared a cash dividend on any shares or any other distribution payable in cash or has sold fractional shares or scrip for the account of a shareholder and has mailed to a shareholder, at his address appearing on the records of the bank or trust company, a valid check in the amount of the dividend or other distribution or the proceeds of such sale to which such shareholder is entitled and, if such check would have been honored if duly presented to the bank on which it is drawn, no action for the recovery of such dividend or other distribution or for the amount thereof shall be brought by the shareholder or other person entitled thereto more than seven years after the date of mailing the check.

(d) If a bank or trust company has declared a dividend payable in its own shares or any other distribution payable in its own shares or in other than cash and has mailed to a shareholder, at his address appearing on the records of the bank or trust company, a certificate representing such shares or a notice setting forth the time and manner in which a distribution in other than its own shares or cash shall be paid, no action for the recovery of such dividends or other distribution or for the amount thereof shall be brought by the shareholder or other person entitled thereto more than seven years after the mailing of the share certificate or certificates or, in the case of a distribution in other than the shares of the bank or trust company or in cash, the time specified in the notice for the payment thereof.

(e) When the statute of limitations provided for in this Code section has run with respect to any unclaimed dividend, other unclaimed distribution, or unclaimed proceeds of the sale of fractional shares or scrip, the cash or property represented thereby shall thenceforth be treated as an asset of the bank or trust company.

§ 7-1-461

(a) Upon the decrease of capital stock of a bank or trust company pursuant to amendment of its articles as provided in this chapter, the board of directors, subject to restrictions of the articles, may distribute to the shareholders of the bank or trust company an amount in cash equal to all or part of the amount of the decrease in capital stock, if immediately after such distribution the bank or trust company would have the capital stock required by this chapter.

(b) Any portion of the amount of a decrease in capital stock which is not distributed to shareholders in accordance with this Code section shall be transferred to paid-in capital.

(c) A bank or trust company, by resolution of its board of directors, may distribute to its shareholders amounts representing a reduction in its paid-in capital, provided that such distribution shall first be approved in writing by the department.

§ 7-1-462

The directors of a bank or trust company shall not declare dividends or authorize or ratify the distribution of any part of its assets to shareholders by purchase of its shares or otherwise, except as authorized by this chapter.

§ 7-1-463

(a) Unless otherwise provided in its articles, a bank or trust company, by resolution of its board of directors and with the prior approval of the department, may redeem or otherwise acquire preferred shares. In determining whether or not to give its approval under this subsection, the department shall give primary consideration to the question of whether or not, after the cancellation of the preferred shares, the capital accounts of the bank or trust company would be adequate to support its anticipated deposit or trust business.

(b) Preferred shares which are redeemed or otherwise acquired shall be canceled and shall not be reissued without prior approval of the department.

§ 7-1-480

(a) Administration of the business and affairs of a bank or trust company shall be the responsibility of a board of directors.

(b) Seventy-five percent of the directors shall be citizens of the United States and at least a majority shall:

(1) Reside in Georgia; or

(2) Reside within 40 miles of any banking location authorized to offer a complete banking or trust service.

(c) The residency requirements of paragraphs (1) and (2) of subsection (b) of this Code section shall not apply to banks having branches in states other than Georgia, provided that the residency of directors is consistent with the bank's articles of incorporation and bylaws.

(d) The department may waive or modify the requirements of subsection (b) of this Code section relating to the residency requirements in the State of Georgia.

(e) Notwithstanding other provisions of this Code section, directors who were legally qualified to serve on April 1, 1975, may continue to serve for such time as they are continuously members of the board of directors of their bank or trust company.

§ 7-1-481

The board of directors shall have the power to adopt, amend, or repeal bylaws as specified in paragraph (4) of Code Section 7-1-260 unless such power is reserved exclusively to the shareholders by the articles or in bylaws previously adopted by the shareholders; but any bylaws adopted by the board of directors may be altered, amended, or repealed and new bylaws adopted by the shareholders. The shareholders may prescribe that any bylaw or bylaws adopted by them shall not be altered, amended, or repealed by the board of directors. Copies of the bylaws and any change, addition, or amendment thereto shall be filed with the department immediately upon adoption by the directors or the shareholders.

§ 7-1-482

(a) The articles or bylaws of any bank or trust company may fix the number of directors of its policy-making board at not less than five nor more than 25 and may provide that the board may, within such limitation, increase or decrease the number of directors by not more than two in any one year, provided that nothing in this subsection shall require a bank with a board of directors of less than five on July 1, 1972, to increase its board to five members. The failure of a bank or trust company to maintain at least five directors at any time does not exculpate the remaining directors from their obligations and liabilities associated with the actions and decisions made as directors of the financial institution, nor does it in any way void any actions taken or decisions made by the board of directors during any such time that there were less than five directors.

(b) Except as otherwise provided in this chapter, each director shall be elected by the shareholders for a term of one year or for staggered terms as provided in Code Section 14-2-806 and shall serve until he or she resigns, is removed, or becomes disqualified or until his or her successor shall have been duly elected and qualified.

(c) Except as otherwise provided in the articles or bylaws, the board of directors may fix the compensation for directors; and a director may be a salaried officer of the bank or trust company.

(d) Notwithstanding the requirements of this Code section, the board of directors of a bank may appoint one or more nonpolicy-making regional boards of directors to consist of a number of persons to be determined by the board. The members of such regional boards may not set bank policy but may exercise certain powers, duties, and responsibilities as delegated by the board. Such regional board members shall have the same status as nonpolicy-making officers of the bank. All such delegations shall be documented in detail in the minutes of the board.

§ 7-1-483

(a) The board of directors shall hold regular meetings at such times as may be fixed by the bylaws and shall at all times be subject to call by the chairman of the board, by the president, or by any two members of the board. The board shall meet at least once in ten different months of each calendar year unless an alternative schedule is approved in writing by the department, but in no event shall the board meet less frequently than once in each calendar quarter.

(b) Unless otherwise provided in the articles or bylaws:

(1) A majority of all the directors in office shall constitute a quorum for the transaction of business; and actions of a majority of those present at a meeting at which a quorum is present shall be actions of the board;

(2) The board of directors may designate three or more of its number to constitute an executive committee or other committees which, to the extent provided in such resolution, shall have and exercise the authority of the board of directors in regard to the business of the bank or trust company;

(3) Any action which may be taken at a meeting of the directors or of the members of an executive or other committee may be taken without a meeting if a consent or consents in writing setting forth the action shall be signed by all of the directors or all of the members of the executive or other committee and filed with the secretary of the bank or trust company; and

(4) The board of directors may determine that a meeting of such board will be held, in whole or in part, by any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means shall be considered to be present in person at the meeting.

§ 7-1-484

(a) Each director, before assuming office, shall take an oath or affirmation that he will diligently and honestly perform his duties in the administration of the affairs of the bank or trust company, that he will not permit a willful violation of law by the bank or trust company, and that he meets the eligibility requirements of this chapter and of the articles and bylaws.

(b) A copy of the oath shall be signed by each director and shall be placed into the minutes of the meetings of the directors. No director shall be authorized to participate in the affairs of the board or receive any compensation for service as a director until the oath has been executed by such director. Any person seeking to act in the capacity of a director before subscribing to the oath and otherwise qualifying for service pursuant to the bylaws of the bank or the laws and regulations governing the operations of the bank shall be fully liable for his actions to the same extent as if that person had qualified to serve as a bank director.

(c) The oath shall not modify in any manner the legal duties of or the standard of care for directors in the exercise of such duties.

§ 7-1-485

(a) The entire board of directors or an individual director may be removed without cause by the vote of shareholders entitled to cast at least a majority of the votes which all shareholders would be entitled to cast at an annual election of directors.

(b) The board may remove a director from office if:

(1) The director is adjudicated an incompetent by a court or is convicted of a felony;

(2) The director does not, within 60 days after his or her election or such longer time as the bylaws may specify, accept the office in writing or by attendance at a meeting and fulfill other requirements for holding the office;

(3) The director fails to attend regular meetings of the board for six successive monthly meetings or two successive quarterly meetings, if quarterly meetings have been approved by the department, without having been excused by the board;

(4) The director was an employee or duly elected officer of the bank or trust company and was discharged or resigned at the request of the board for reasons relating to performance of duties as an employee or officer of the bank or trust company;

(5) The director has been indicted for any crime involving moral turpitude, dishonesty, or breach of trust; or

(6) The director has failed to make payments on a loan or other extension of credit which causes a loss to a financial institution.

(c) Vacancies in the board of directors, whether caused by removal or otherwise and including vacancies resulting from an increase in the number of directors, may be filled by the remaining members of the board, even though less than a quorum. Each director so elected shall be a director until his successor is elected by the shareholders, who shall make such election at the next annual meeting of shareholders or at any special meeting called for that purpose prior thereto.

§ 7-1-486

The board of directors of any bank or trust company may appoint an individual as an honorary director or director emeritus or member of an advisory board. An individual so appointed may be compensated but may not vote at any meeting of the board of directors or be counted in determining a quorum and shall not have any responsibility or be subject to any liability imposed upon a director, or otherwise be deemed a director.

§ 7-1-487

(a) The board of directors shall at least once each year have made by independent certified public accountants an audit of the books and affairs of the bank or trust company, including such matters as may be required by the department and including, in the case of a trust company, accounts held in a fiduciary or other representative capacity. An audit of a bank holding company performed in accordance with this Code section may be made in lieu of individual audits of subsidiaries of the bank holding company. The department may by regulation establish minimum standards for audits and reports under this Code section.

(b) A report of the audit made under subsection (a) of this Code section shall be signed by the accountants who make it. A signed copy of the report shall be submitted to the board for approval or rejection and kept in the files of the bank or trust company. The bank or trust company shall submit the audit to the department in accordance with department regulations.

§ 7-1-488

(a) A bank or trust company shall have a president, a secretary, and such other officers as the directors may from time to time designate. An individual may hold more than one office, except that the individual shall not be both president and secretary.

(b) Except as otherwise provided in the articles or bylaws, the board of directors shall elect the officers, fix their compensation, and fill vacancies, however occurring. An officer elected or appointed by the board may be removed by the board at any time, whenever in its judgment the best interests of the institution will be served thereby, without prejudice to any contract right of such officer. The department shall immediately be notified in writing when the individual holding the position of chief executive officer or president of the bank changes.

(c) The officers, as between themselves and the bank or trust company, shall have such authority and perform such duties as may be provided in the bylaws adopted by the board.

(d) A bank or trust company may also employ such agents or employees as may be required for the prompt and orderly discharge of its business.

(e)(1) Except as otherwise provided in the articles, a bank or trust company may adopt and carry out a plan, approved by the directors and the affirmative vote of a majority of the shares entitled to vote thereon, for the sale of shares, or for the granting of options for shares, to some or all of the officers and employees of the bank or trust company or of any affiliate of the bank or trust company or to a trustee on behalf of such employees, upon such terms and conditions and in such manner as may be provided by the bylaws or by the board. In any such plan:

(A) Such shares may be sold or optioned upon terms (not less than the par value thereof) which are deemed advantageous to the bank or trust company by the directors other than directors who may benefit by their action or, if the number of directors who will not benefit by the action is fewer than three, by the shareholders; and

(B) In the absence of fraud in the transaction, the judgment of the board of directors or the shareholders as to the adequacy of the consideration received for any rights or options to purchase shares under the plan shall be conclusive.

(2) Such a plan may be adopted whether or not it qualifies for special tax treatment under the laws of the United States.

§ 7-1-489

Any director who is authorized to handle money or negotiable assets on behalf of a bank or trust company and all officers and employees of a bank or trust company shall be bonded by a regularly incorporated surety company authorized to do business in this state, and the bank or trust company may pay the cost of such fidelity bonds. The form, amount, and surety of such fidelity bonds shall be such as are approved by the board of directors; but the department may require an additional amount or new or additional surety.

§ 7-1-490

(a) Directors and officers of a bank or trust company shall discharge the duties of their respective positions in good faith and with the degree of diligence, care, and skill which an ordinarily prudent person would exercise under similar circumstances.

(b) In performing his or her duties, a director or officer may be entitled to rely upon:

(1) Other officers, employees, or agents of the bank or trust company whom the director or officer reasonably believed to be reliable and competent in the functions performed; and

(2) Information, data, opinions, reports, or statements provided by other officers, employees, agents of the bank or trust company, legal counsel, public accountants, investment bankers, or other persons as to matters involving the skills, expertise, or knowledge reasonably believed to be reliable and within such person's professional or expert competence.

(c) There shall be a presumption that the process directors and officers followed in arriving at decisions was done in good faith and that such directors and officers have exercised ordinary care; provided, however, that this presumption may be rebutted by evidence that such process constitutes gross negligence by being a gross deviation of the standard of care of a director or officer in a like position under similar circumstances.

(d) A bank, through its board of directors, may delegate to a correspondent bank the power to determine, within the limits set by law, the investments in which its assets, including reserve assets, may be held, provided that the bank must obtain the prior written approval of the department for such delegation.

(e) Nothing in this Code section shall:

(1) In any instance when fairness is at issue, such as consideration of the fairness of a transaction to the bank or trust company as evaluated under paragraph (3) of subsection (b) of Code Section 14-2-861, alter the burden of proving the fact or lack of fairness otherwise applicable;

(2) Alter the fact or lack of liability of a director or officer under the Official Code of Georgia Annotated, including Code Sections 7-1-492 and 7-1-494;

(3) Affect any rights to which the bank or trust company or its shareholders may be entitled under another law of this state or of the United States; or

(4) Deprive a director or officer of the applicability, effect, or protection of the business judgment rule.

§ 7-1-491

In addition to other provisions in this chapter and federal law, a bank or trust company shall not make loans or otherwise extend financing to any one of its directors or policy-making officers except on terms, rates, and conditions which are not preferential. Preferential terms, rates, and conditions shall be determined by comparison to those terms, rates, and conditions offered contemporaneously to other borrowers making substantially similar loan requests, having substantially similar credit histories, and offering substantially similar collateral. Such loans shall be made only after the application of prudent loan underwriting criteria normally applied to loan requests of a similar nature from applicants who are not directors and policy-making officers. Approval procedures for such loans should be designed to minimize any potential abuse by bank insiders.

§ 7-1-492

(a) No director, officer, or employee of a bank or trust company shall:

(1) Receive anything of value for procuring or attempting to procure any loan from or investment by the bank or trust company;

(2) Purchase, or directly or indirectly be interested in purchasing, from the bank or trust company for less than its face value any promissory note or other evidence of indebtedness issued by the bank or trust company;

(3) Purchase or sell any other asset to the bank or trust company except:

(A) Upon terms not less favorable to the bank or trust company than those offered to other persons or corporations; and

(B) With the prior approval of the board of directors or a committee thereof authorized to act for the board, unless the transaction is made in the regular course of business.

(b) No director shall be eligible to vote concerning any purchase or sale where he is or would be a party to the transaction.

(c) It shall be unlawful for any bank or trust company to lend to any officer, director, or employee any funds held in trust under powers granted in this chapter.

§ 7-1-493

(a) An action may be brought by any of the persons named in subsection (b) of this Code section against one or more directors or officers of a bank or trust company to procure for the benefit of the bank or trust company a judgment for the following relief:

(1) To compel the defendant to account for his or her official conduct, or to decree any other relief called for by his or her official conduct, in the following cases:

(A) The neglect of, failure to perform, or other violation of his or her duties in the management of the bank or trust company or in the disposition of corporate assets committed to his or her charge;

(B) The acquisition by himself or herself, transfer to others, loss, or waste of corporate assets due to any neglect of, failure to perform, or other violation of his or her duties;

(2) To enjoin a proposed unlawful conveyance, assignment, or transfer of corporate assets or other unlawful corporate transaction, where there is sufficient evidence that it will be made;

(3) To set aside an unlawful conveyance, assignment, or transfer of corporate assets, where the transferee knew of its unlawfulness and is made a party to the action.

(b) An action may be brought for the relief provided in this Code section and in Code Section 7-1-494, relating to the liability of directors in certain cases, by the bank or trust company, or by a receiver, trustee in bankruptcy, officer, director, or judgment creditor thereof, or by a shareholder in accordance with Code Sections 7-1-440 and 7-1-441, relating to derivative actions.

(c) No action shall be brought for the relief provided in this Code section more than four years from the time the cause of action accrued.

(d) This Code section shall not limit any liability otherwise imposed by law upon any director or officer or any third party, provided that after April 1, 1975, Code Section 14-4-65, relating to improper dividends and liability of officers, shall no longer be applicable to officers or directors of banks or trust companies.

(e) Notwithstanding the foregoing, a bank or trust company may provide in its articles of incorporation for the elimination or limitation of the personal liability of a director to the bank or trust company or its shareholders to the same extent as a business corporation incorporated under the provisions of Chapter 2 of Title 14.

§ 7-1-494

(a) In addition to any other liabilities imposed by law upon directors of a bank or trust company:

(1) Directors of a bank or trust company who vote for or assent to the declaration of any dividend or other distribution of the assets of a bank or trust company to its shareholders which is not authorized by this chapter or is contrary to any restrictions contained in the articles shall be jointly and severally liable to the bank or trust company for the amount of such dividend which is paid or the value of such assets which are distributed in excess of the amount of such dividend or distribution which could have been paid or distributed without a violation of the provisions of this chapter or the restrictions in the articles to the extent that any depositor, creditor, or shareholder of the bank or trust company has suffered damage as a result thereof; and

(2) The directors of a bank or trust company who vote for or assent to any distribution of assets of a bank or trust company to its shareholders during the voluntary liquidation of the bank or trust company without the payment and discharge of, or making adequate provisions for, all known debts, obligations, and liabilities of the bank or trust company shall be jointly and severally liable to the bank or trust company for the value of such assets which are distributed, to the extent that such debts, obligations, and liabilities of the bank or trust company are not thereafter paid and discharged.

(b) A director of a bank or trust company who is present at a meeting of its board of directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered or certified mail or statutory overnight delivery to the secretary of the bank or trust company within 24 hours after the adjournment of the meeting. Such right to dissent shall not apply to a director who, being present at the meeting, failed to vote against such action.

(c) A director shall not be liable under subsection (a) of this Code section if he relied and acted in good faith upon financial information of the bank or trust company represented to him to be correct by the president or the officer of the bank or trust company having charge of its books of account or stated in a written report by an independent or certified public accountant or firm of such accountants to reflect fairly the financial condition of such bank or trust company; nor shall he be so liable if in good faith in determining the amount available for any such dividend or distribution he considered the assets to be represented fairly on the books of the bank.

(d) Any director against whom any claim shall be asserted under or pursuant to this Code section for the payment of a dividend or other distribution of assets of a bank or trust company and who shall be held liable thereon shall be entitled to contribution from the shareholders who, knowing such dividend or distribution to have been made in violation of this chapter, accepted or received any such dividends or assets in proportion to the amounts received by them respectively.

(e) Any director against whom any claim shall be asserted under or pursuant to this Code section shall be entitled to contribution from the other directors who voted for or assented to the action upon which the claim is asserted.

(f) No liability under this Code section shall be asserted more than six years from the time the cause of action accrued.

§ 7-1-510

(a) A bank or trust company may, in the manner provided in this part, amend its articles at any time in order to make any change therein which would then be authorized for inclusion in original articles under this chapter, including without limitation an amendment:

(1) To adopt a new name permitted to be used under this chapter;

(2) To renew the term for which it is to exist or to provide for perpetual duration;

(3) To change, add to, or diminish the statement of its purpose or purposes;

(4) To increase or diminish the aggregate number of shares which it has authority to issue or to reclassify the shares by changing the number, par value, designations, preferences, redemption provisions, or relative, participating, optional, or other special rights of the shares or the qualifications, limitations, or restrictions of such rights, either with or without an increase or decrease in the number of shares;

(5) To restate the articles in their entirety;

(6) To change its main office location to a new location; or

(7) In the case of a bank, to become a trust company and, in the case of a trust company, to become a bank, with or without retaining an existing capacity to engage in the banking or trust business as the case may be.

(b) Articles restated in their entirety shall state the street address and county of the current instead of the original main office of the bank or trust company and need not state the names or other information concerning the first directors or the incorporators.

(c) Articles need not be amended for the addition or change of a registered agent or the change of a registered office. The bank or trust company shall, however, notify in writing the department and the Secretary of State of such changes.

§ 7-1-511

(a) An amendment of the articles shall be proposed by adoption of a resolution by the board of directors directing that it be submitted to a vote at a meeting of shareholders.

(b) The resolution proposing an amendment or amendments shall contain the language of each amendment by setting forth in full the articles as they would be amended or any provision thereof as it would be amended or by setting forth in full any matter to be added to or deleted from the articles. A copy of the resolution or a summary thereof shall be included with the notice of the meeting required under Code Section 7-1-6.

(c) Except as provided in subsections (d), (e), and (f) of this Code section, adoption of each amendment shall require the affirmative vote of the shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast thereon and, if any class is entitled to vote thereon as a class, of the holders of at least a majority of the outstanding shares of such class.

(d) If a proposed amendment would:

(1) Make any change in the preferences, redemption provisions, qualifications, limitations, restrictions, or special or relative rights of the shares of any class adverse to such class;

(2) Increase or decrease the par value of the shares of any class;

(3) Increase the authorized number of shares of any class;

(4) Limit or deny the existing preemptive rights of the shares of any class; or

(5) Authorize a new class of shares or increase the number of authorized shares of any class, senior or superior in any respect to the shares of any class previously authorized,

the holders of the outstanding shares of such class shall be entitled to vote as a class on such amendment regardless of any limitation stated in the articles on the voting rights of such class.

(e) Any amendment for the purposes set forth in paragraph (7) of subsection (a) of Code Section 7-1-510 shall require for its adoption the affirmative vote of at least two-thirds of all the shares entitled to vote thereon or of each class entitled to vote thereon where voting by class is required.

(f) Notwithstanding the other provisions of this Code section, the board of directors may adopt a resolution amending the articles to change the name of the bank or trust company without shareholder action unless the articles provide otherwise.

§ 7-1-512

(a) Upon the adoption of an amendment, articles of amendment shall be signed by two duly authorized officers of the bank or trust company under its seal and shall contain:

(1) The name of the bank or trust company;

(2) The street address and county of its main office;

(3) Whether it was incorporated with banking or trust powers or both;

(4) The time and place of the meeting of shareholders at which the shareholders approved the resolution of the board of directors, as originally proposed or as amended, and the kind and period of notice given to the shareholders;

(5) The number of shares entitled to vote on the amendment and, if the shares of any class are entitled to vote as a class, the number of shares of each such class;

(6) The number of shares voted for and against the amendment and, if shares of any class are entitled to vote as a class, the number of shares of each such class voted for and against the amendment; and

(7) The amendment adopted, which shall be set forth in full.

(b) The articles of amendment shall be filed with the department together with:

(1) The fee required by Code Section 7-1-862; and

(2) As soon as possible, a publisher's affidavit as proof of publication of the advertisement required by Code Section 7-1-513.

(c) The filing of articles of amendment shall constitute an application for a certificate of amendment. If the articles of amendment involve a change in the name of a bank or trust company, it shall reserve the proposed new name under the procedures of Code Section 7-1-131.

§ 7-1-513

When the articles of amendment are filed, the department shall certify one of the copies thereof and deliver the same to the bank or trust company. The bank or trust company shall cause to be published in a publication as specified in the rules, regulations, or written policies of the department a copy of the articles of amendment or, in lieu thereof, a statement in substantially the following form:

NOTICE OF AMENDMENT

An application for a certificate of amendment of its articles of incorporation has been made by (name of bank or trust company) by filing such application with the Department of Banking and Finance in accordance with the applicable provisions of Chapter 1 of Title 7 of the Official Code of Georgia Annotated, known as the “Financial Institutions Code of Georgia.” The (purpose) (purposes) of said articles of amendment (is) (are) (state the purpose of each amendment affected by the articles of amendment).

The articles of amendment or the statement must be published once a week for two consecutive weeks with the first publication occurring within ten days of receipt by the newspaper of the articles of amendment or statement.

§ 7-1-514

(a) Upon receipt of the articles of amendment, the department shall conduct such investigation as it may deem necessary to determine:

(1) That the articles of amendment and supporting items satisfy the requirements of this chapter;

(2) Where the amendment would grant new powers or status to a bank or trust company, that the criteria for the granting of such powers or status as an original matter have been satisfied;

(3) Where the amendment decreases the capital stock of the institution, that the remaining capital stock will be adequate to support its anticipated banking or trust business;

(4) Where the amendment provides for a change to a new location, that the criteria for establishing a banking office at the new location have been satisfied; and

(5) That the interests of the shareholders, depositors, and the public will not be impaired by the amendment.

(b) Within 60 days after receipt of the articles of amendment, the department, in its discretion, shall approve or disapprove the articles of amendment on the basis of its investigation and criteria set forth in subsection (a) of this Code section. If the department shall approve the articles of amendment, it shall deliver its written approval to the Secretary of State with a copy of the amendment attached and notify the bank or trust company of its action. If the department shall disapprove the articles of amendment, it shall give written notice to the bank or trust company and shall furnish to the bank or trust company a statement generally setting out the unfavorable factors influencing its decision. The decision of the department shall be conclusive, except that it may be subject to judicial review as provided in Code Section 7-1-90.

§ 7-1-515

If all the fees and charges required by law have been paid and, in the case of a change of name, if the proposed new name of the bank or trust company continues to be reserved or is available on the records of the Secretary of State, upon the receipt by the Secretary of State of the written approval of the department and of proof of publication of the amendments as required by Code Section 7-1-513, the Secretary of State shall immediately issue to the bank or trust company a certificate of amendment and shall retain a copy thereof along with the approved articles of amendment, the written approval of the department, and the proof of publication.

§ 7-1-516

(a) As of the issuance of the certificate of amendment by the Secretary of State, each amendment shall become effective and the articles shall be deemed to be amended accordingly.

(b) The certificate of amendment shall be conclusive evidence of the performance of all conditions required by this chapter for amendment of articles, except as against the state.

(c) No amendment shall affect any existing cause of action in favor of or against the bank or trust company, any pending action in which the bank or trust company is a party, or existing rights of persons other than shareholders. If the amendment changes the name of the bank or trust company, no action by or against the institution shall be abated for that reason.

§ 7-1-530

(a) Upon compliance with the requirements of this part and other applicable laws and regulations, including any branching and minimum age laws and regulations, banks or trust companies may merge or consolidate, provided that a trust company may merge or consolidate with a bank that is authorized to exercise trust powers so long as the resulting institution is a bank. Upon compliance with the requirements of this part and other applicable laws and regulations, including any branching and minimum age laws and regulations, a corporation other than a bank or trust company may acquire all of the outstanding shares of one or more classes or series of one or more banks or trust companies through a share exchange.

(b) A corporation or limited liability company other than a bank or trust company may be merged into or consolidated with, or may enter into a share exchange with, a bank or trust company, provided that:

(1) The resulting institution of the merger or consolidation is a bank or trust company;

(2) The resulting institution of the merger or consolidation, or the acquired bank or trust company in a share exchange, holds only assets and liabilities and is engaged only in activities which may be held or engaged in by a bank or trust company; and

(3) The merger, share exchange, or consolidation is not otherwise unlawful.

(c) A merger, share exchange, or consolidation pursuant to subsection (b) of this Code section shall be made by compliance with the requirements of this part. Title 14 shall not be applicable to such a merger, share exchange, or consolidation.

(d) A merger, share exchange, or consolidation across state lines shall also be subject to the provisions of Part 20 of this article.

(e) In the case of a merger of a Georgia state bank with any other bank or banks, with the Georgia bank as the resulting bank, any assets, lines of business, activities, or powers which may accrue to the resulting bank which would not be allowed for a Georgia state bank shall be provided for in the plan of merger. Such plan shall include the proposal for holding or disposal of such assets or the continuation or termination of such line of business, activity, or power. The department shall review the plan to determine whether, in the interest of safety and soundness and consistent with the other objectives of Code Section 7-1-3, the activity, power, asset, or line of business should be approved, denied, or phased out within a reasonable period of time, to be determined by the department.

(f) As used in this part, the term:

(1) “Bank” includes a national bank or trust company with its main office in this state if such national bank or trust company is merging with a Georgia state bank or trust company.

(2) “Share exchange” means a plan of exchange of all of the outstanding shares of one or more classes or series of shares in accordance with this part.

(g) Subject to the provisions of this part, this Code section does not limit the power of a corporation or limited liability company other than a bank or trust company to acquire all or part of the shares of one or more classes or series of a bank or trust company through a voluntary exchange of shares or otherwise.

§ 7-1-531

(a) The requirements for a merger, share exchange, or consolidation which must be satisfied by the parties thereto are as follows:

(1) The parties shall adopt a plan stating the method, terms, and conditions of the merger, share exchange, or consolidation, including the rights under the plan of the shareholders or members of each of the parties and any agreement concerning the merger, share exchange, or consolidation. Said plan shall specify:

(A) The name that such bank or trust company shall have upon and after such merger, share exchange, or consolidation, which may be the name of any one of the institutions or the combined names of two or more of the institutions or such other name as stated;

(B) The persons who shall constitute the board of directors of the bank or trust company after the merger, share exchange, or consolidation;

(C) In the case of a merger or consolidation, the manner and basis of converting the shares of each merged or consolidated institution into shares or other securities or obligations of the surviving bank or trust company and, if any shares of any of the merged or consolidated institutions are not to be converted solely into shares or other securities of the surviving bank or trust company, the amount of cash or securities of any other corporation, or combination of cash and such securities, which is to be paid or delivered to the holders of such shares in exchange for or upon the surrender of such shares, which cash or securities may be in addition to or in lieu of the shares or other securities of the surviving bank or trust company;

(D) In the case of a share exchange, the terms and conditions of the share exchange and the manner and basis of exchanging the shares to be acquired for shares, obligations, or other securities of the acquiring or any other corporation or for cash or other property in whole or in part; and

(E) Such other provisions with respect to the proposed merger or consolidation as are deemed desirable.

(2) Adoption of the plan by each party thereto shall require the affirmative vote of at least:

(A) A majority of the directors; and

(B) Unless the article or bylaws require a greater vote, the shareholders or members entitled to cast a majority of the votes which all shareholders or members are entitled to cast thereon and, if any class of shares is entitled to vote thereon as a class, the holders of a majority of the outstanding shares of such class, at a meeting of shareholders or members; provided, however, that approval from the shareholders or members of the surviving bank or trust company is not required if the conditions set forth in subsection (h) of Code Section 14-2-1103 are satisfied.

(3) If any party is a national bank, then the adoption of the plan shall comply with the applicable laws of such national bank's chartering entity, including, but not limited to, any provisions related to the adoption of such plan by the shareholders or members and directors of the bank and to the dissenting rights of shareholders or members of the bank.

(4) Whenever a meeting of shareholders or members is called for the purpose of taking action on a plan, the notice for such meeting shall include a copy or summary of the plan and a full statement of the rights and remedies of dissenting shareholders or members, the method of exercising them, and the limitations on such rights and remedies.

(b) Any modification of a plan which has been adopted shall be made by any method provided therein or, in the absence of such provision, by the same vote as that required for adoption.

§ 7-1-532

(a) Upon adoption of the plan of merger, share exchange, or consolidation as provided in Code Section 7-1-531, the parties to the merger, share exchange, or consolidation shall file with the department articles of a merger, share exchange, or consolidation as required by this Code section, together with the fee required by Code Section 7-1-862.

(b) The articles of merger, share exchange, or consolidation shall be signed by two duly authorized officers of each party to the plan under their respective seals and shall contain:

(1) The names of the parties to the plan and of the resulting bank or trust company or the acquiring corporation in a share exchange;

(2) The street address and county of the location of the main office and registered agent and registered office of each;

(3) The votes by which the plan was adopted and the time, place, and notice of each meeting in connection with such adoption;

(4) The name and county of residence of each director of the resulting bank or trust company or each director of the acquired corporation in a share exchange;

(5) In the case of a merger, any amendment of the articles of the resulting bank or trust company;

(6) In the case of a consolidation, the provisions required in articles of a new bank or trust company by paragraphs (4), (5), (6), (7), and (10) of subsection (a) of Code Section 7-1-392; and

(7) The plan.

(c) Together with the articles of merger, share exchange, or consolidation, the parties shall deliver to the department a copy of the notice of merger, share exchange, or consolidation and an undertaking, which may appear in the articles of merger, share exchange, or consolidation or be set forth in a letter or other instrument executed by an officer or any person authorized to act on behalf of such bank or trust company, that the request for publication of a notice of filing the articles of merger, share exchange, or consolidation and payment therefor will be made as required by subsection (d) of this Code section.

(d) No later than the next business day after filing the articles of merger, share exchange, or consolidation with the department, the parties shall mail or deliver to the publisher of a newspaper which is the official organ of the county where the main office of each party is located a notice which shall contain a statement that the articles of merger, share exchange, or consolidation have been filed with the department, the names of the institutions which are parties to the proposed merger, share exchange, or consolidation, and in the case of a merger the proposed name of the surviving bank or trust company, and shall designate a place where a copy of the articles of merger, share exchange, or consolidation may be examined. Subsections (b) and (c) of Code Section 7-1-7 shall also apply to the notice.

(e) The notice shall be published once a week for two consecutive weeks commencing within ten days after receipt of the notice by the newspaper.

(f) In the event the plan is amended as provided in Code Section 7-1-531, the parties shall promptly file with the department an amendment to the articles of consolidation, share exchange, or merger reflecting such amendment of the plan.

§ 7-1-533

The parties to the plan shall also file with the department:

(1) An application and information desired by the department in order to evaluate the proposed merger, share exchange, or consolidation, which shall be made available in the form specified by the department;

(2) Applicable fees established by regulation of the department to defray the expenses of the investigation required by Code Section 7-1-534; and

(3) If the merger, share exchange, or consolidation involves the adoption of a new name, a certificate of the Secretary of State reserving said name under Code Section 7-1-131.

§ 7-1-534

(a) Upon receipt of the articles of consolidation, share exchange, or merger and the filings required by Code Section 7-1-533, the department shall conduct such investigation as it may deem necessary to ascertain whether:

(1) The articles of merger, share exchange, or consolidation and supporting items satisfy the requirements of this chapter;

(2) The plan and any modification thereof adequately protect the interests of depositors, other creditors, and shareholders;

(3) The requirements for a merger, share exchange, or consolidation under all applicable laws have been satisfied and the resulting bank or trust company or the acquired bank or trust company in a share exchange would satisfy the requirements of this chapter applicable to it; and

(4) The merger, share exchange, or consolidation would be consistent with adequate and sound banking or fiduciary practice and in the public interest on the basis of:

(A) The financial history and condition of the parties to the plan;

(B) The proposed business plan; and

(b) Within 90 days after receipt of the articles of merger, share exchange, or consolidation, the notice of merger or share exchange, and the filings required by Code Section 7-1-533, or within an additional period of not more than 30 days after an amendment to the application is received within the initial 90 day period, the department shall, in its discretion, approve or disapprove the articles on the basis of its investigation and the criteria set forth in subsection (a) of this Code section. Except as provided in Code Section 7-1-535, the department shall give the Secretary of State written notice of its approval with a copy of the articles of merger, share exchange, or consolidation and a copy of the notice of merger or share exchange attached. The department shall also give the parties to the plan written notice of its decision and, in the event of disapproval, a statement in general of the reasons for its decision. The decision of the department shall be conclusive, except that it may be subject to judicial review as provided in Code Section 7-1-90.

(c)(1) If a merger or consolidation would result in a bank or trust company that would not be chartered by the department, prior to the consummation of the merger or consolidation, the bank or trust company shall:

(A) Notify the department of the proposed merger or consolidation;

(B) Provide such evidence of the adoption of the plan of merger or consolidation as the department may request;

(D) File with the department and the Secretary of State a certificate of the approval of the merger or consolidation by the appropriate regulator.

(2) Upon receipt of written confirmation from the department that the requirements of this subsection have been satisfied, each party to the merger or consolidation, except the resulting bank or trust company, shall cease to exist as a separate entity, as provided in subsection (c) of Code Section 7-1-536, and its articles shall automatically terminate.

§ 7-1-535

(a) If the laws of the United States require the approval of the merger, share exchange, or consolidation by any federal agency, the department may elect to not act on the application until it receives notice of the decision of such agency.

(b) If all the taxes, fees, and charges required by law shall have been paid and if the name of the resulting bank or trust company in a merger or consolidation continues to be reserved or is available on the records of the Secretary of State, upon receipt of the written approval of the department, the Secretary of State shall issue to the resulting bank or trust company or the acquiring corporation or limited liability company in a share exchange a certificate of merger, share exchange, or consolidation with the approved articles of merger or consolidation attached thereto and shall retain a copy of such certificate, articles, and approval by the department.

§ 7-1-536

(a) As of the issuance of the certificate of merger, share exchange, or consolidation by the Secretary of State, the merger, share exchange, or consolidation shall be effective.

(b) The certificate of merger, share exchange, or consolidation shall be conclusive evidence of the performance of all conditions precedent to the merger, share exchange, or consolidation and of the existence or creation of the bank or trust institution, except as against the state.

(c) When a merger or consolidation becomes effective, each party to the plan, except the resulting bank or trust company, shall cease to exist as a separate entity but shall continue in, and the parties to the plan shall be, a single corporation which shall be the bank or trust company and which shall have, without further act or deed, all the property, rights, powers, trusts, duties, and obligations of each party to the plan. When a share exchange becomes effective, the shares of each acquired bank or trust company are exchanged as provided in the plan, and the former holders of the shares are entitled only to the share exchange rights provided in the plan of share exchange or to their rights under Code Section 7-1-537.

(d) The articles of the resulting bank or trust company shall be, in the case of a merger, the same as its articles prior to the merger with any change stated in the articles of merger or, in the case of a consolidation, the provisions stated in the articles of consolidation.

(e) The resulting bank or trust company, or the acquired bank or trust company in a share exchange, shall have the authority to engage only in such business and exercise only such powers as are then permissible upon original incorporation under this chapter and shall be subject to the same prohibitions and limitations as it would then be subject to upon original incorporation. It may, however, subject to permission of the department as set out in Code Sections 7-1-530 and 7-1-555, engage in any business and exercise any right that any bank or trust company which is a party to the plan could lawfully exercise or engage in immediately prior to the merger, share exchange, or consolidation.

(f) No liability of any party to the plan or of its shareholders, directors, or officers shall be affected nor shall any lien on any property of a party to the plan be impaired by the merger, share exchange, or consolidation. Any claim existing or action pending by or against any party to the plan may be prosecuted to judgment as if the merger, share exchange, or consolidation had not taken place or the resulting bank or trust company may be substituted in its place.

§ 7-1-537

(a) A shareholder of a bank or trust company which is a party to a plan of proposed merger, share exchange, or consolidation under this part who objects to the plan shall be entitled to the rights and remedies of a dissenting shareholder as determined under Chapter 2 of Title 14, known as the “Georgia Business Corporation Code.”

(b) The bank or trust company into which the other or others have been merged or consolidated, or the acquiring corporation in a share exchange, as the case may be, shall have the right to require the return of the original certificates of stock held by each shareholder in each or either of the institutions and in lieu thereof:

(1) To issue to each shareholder new certificates for such number of shares of the institution into which the others shall have been merged or consolidated or of the acquiring corporation in a share exchange; or

(2) To cause to be paid or delivered to each shareholder the amount of cash or securities of any other corporation or combination of cash and such securities as, under the plan of merger, share exchange, or consolidation, the said shareholder may be entitled to receive.

§ 7-1-550

(a) Subject to this part and any applicable branching law or regulation, a national bank may convert to a bank or trust company upon:

(1) Compliance with the applicable laws of the United States, including any provisions thereof relating to approval of said conversion by the shareholders and directors of the national bank and to dissenting rights of shareholders in such national bank, and compliance with any other requirements prescribed by the department to protect the shareholders or members or the safety and soundness of the institution;

(2) Reserved;

(3) Approval of the conversion by the department as provided in this part; and

(4) Issuance of the appropriate certificate by the Secretary of State as provided in this part.

(b) Reserved.

(c) A federal savings bank may apply to the department to convert to a state charter. The provisions of Code Section 7-1-293 shall apply to the resulting bank, and the conversion procedure shall be the same as for national bank conversions.

§ 7-1-551

(a) The party or parties desiring to consummate a conversion authorized by Code Section 7-1-550 shall, upon requisite approval of the plan by their directors and shareholders, file with the department articles of conversion together with the fee required by Code Section 7-1-862.

(b) The articles of conversion shall be signed by two duly authorized officers of the national bank under its seal and shall contain:

(1) Its name and the name of the resulting bank or trust company;

(2) The street address and county of its main office;

(3) The name and initial registered agent and the street address where the initial registered office will be located;

(4) The votes by which the plan of conversion was adopted and the time, place, and notice of each meeting in connection with such adoption;

(5) The name and county of residence of each director of the resulting bank or trust company;

(6) The provisions required in articles of a new bank or trust company by paragraphs (5), (6), (7), and (10) of subsection (a) of Code Section 7-1-392; and

(7) The plan of conversion.

§ 7-1-552

In the case of a conversion, the national bank shall file with the department:

(1) Information desired by the department in order to evaluate the proposed conversion, in the form specified by the department;

(2) Applicable fees established by regulation of the department to defray the expenses of its investigation under Code Section 7-1-553; and

(3) A certificate of the Secretary of State showing that the proposed name of the resulting bank or trust company has been reserved under Code Section 7-1-131.

§ 7-1-553

(a) In the case of a conversion, the department shall conduct such investigation as it may deem necessary to ascertain whether:

(1) The articles of conversion and supporting items satisfy the requirements of this chapter;

(2) The plan adequately protects the interests of depositors, other than creditors and shareholders; and

(3) The requirements for a conversion under all applicable laws have been satisfied and the resulting institution would satisfy the requirements of this chapter applicable to it.

(b) Within 90 days after receipt of the articles and the filings required by Code Section 7-1-552, the department shall, in its discretion, approve or disapprove the articles on the basis of its investigation and the criteria set forth in subsection (a) of this Code section. If the department shall approve the articles, it shall deliver its written approval with a copy of the articles attached to the Secretary of State and notify the national bank, and any other parties to the plan, of its action, provided that, if approval of any federal agency is required, the department may elect to not act on the application until such federal approval is given. If the department shall disapprove, at its option, the application, it shall give written notice to the national bank and any other parties to the plan of its disapproval and a statement to them generally of the reasons for its decision. The decision of the department shall be conclusive, except that it may be subject to judicial review under Code Section 7-1-90.

§ 7-1-554

If all the taxes, fees, and charges required by law shall have been paid and if the name of the resulting bank or trust company continues to be reserved or is available on the records of the Secretary of State, upon the receipt of the written approval of the department, the Secretary of State shall immediately issue to the resulting bank or trust company a certificate of conversion and shall retain a copy of such certificate, the articles, and the approval from the department.

§ 7-1-555

Issuance of a certificate of conversion shall have the following effect:

(1) As of the issuance of the certificate of conversion by the Secretary of State, the conversion shall become effective;

(2) The certificate of conversion shall be conclusive evidence of the performance of all conditions required by this chapter for conversion of a national bank to a state bank or trust company, except as against the state;

(3) When a conversion becomes effective, the existence of the national bank shall continue in the resulting bank or trust company which shall have (except as provided in paragraph (2) of this subsection), without further act or deed, all the property, rights, powers, trusts, duties, and obligations of the national bank;

(4) The articles of the resulting institution shall be the provisions stated in the articles of conversion;

(5) The bank or trust company shall have the authority to engage only in such lines of business and activities and exercise only such powers or hold such assets as are then permissible upon original incorporation under this chapter and shall be subject to the same prohibitions and limitations as it would then be subject to upon original incorporation; provided, however, that if the converting institution owns or holds assets, engages in any business, or has powers that would not be allowed for a state bank, then the plan of conversion shall include a plan for holding or disposal of such nonconforming assets or the continuation or termination of such line of business, activity, or power. The department shall review the plan to determine whether, in the interest of safety and soundness and the other objectives of Code Section 7-1-3, the activity, power, asset, or line of business should be approved, denied, or phased out within a reasonable period of time, to be determined by the department; and

(6) No liability of the national bank or of its shareholders, directors, or officers shall be affected, nor shall any lien on any property of the national bank be impaired, by the conversion. Any claim existing or action pending by or against the national bank may be prosecuted to judgment as if the conversion had not taken place, or the resulting bank or trust company may be substituted in its place.

§ 7-1-556

(a) A bank or trust company may convert to a national bank or a federal savings institution upon:

(1) Authorization by and compliance with the laws of the United States; and

(2) Adoption of a plan of conversion by the affirmative vote of at least:

(A) A majority of its directors; and

(B) The holders of two-thirds of each class of its shares at a meeting held upon not less than ten days' notice to all shareholders.

(b) A state bank or trust company which converts to a national bank or a federal savings institution shall:

(1) Notify the department of the proposed conversion;

(2) Provide such evidence of the adoption of the plan of conversion as the department may request;

(3) Notify the department of any abandonment or disapproval of the plan; and

(4) File with the department and with the Secretary of State a certificate of the approval of the conversion by the appropriate federal regulator.

(c) Conversion of a state institution to a national banking association or a federal savings institution shall be effective upon completion of the requirements in subsection (b) of this Code section. Upon receipt of written confirmation from the department that the requirements of subsection (b) of this Code section have been satisfied, the institution's articles as an institution existing under the laws of this state shall be automatically terminated.

§ 7-1-570

(a) Unless the articles or bylaws otherwise provide, the board of directors may authorize any of the following transactions without any vote or consent of the shareholders:

(1) Any mortgage or pledge of, or creation of a security interest in, or conveyance of title to, all or any part of the property and assets of the bank or trust company of any description, or any interest therein, for the purpose of securing the payment or performance of any contract, note, bond, or other obligation of the bank or trust company; or

(2) Any sale, lease, exchange, or other disposition of less than substantially all the property and assets of the bank or trust company.

(b) Any transaction made as permitted by this Code section without any vote or consent of the shareholders may be upon such terms and conditions and for such consideration as the board may deem to be in the best interests of the bank or trust company.

§ 7-1-571

A sale, lease, exchange, or other disposition of all, or substantially all, the property and assets, with or without the good will, of a bank or trust company, in all cases other than those dealt with in Code Section 7-1-570, regarding secured transactions, may be made upon such terms and conditions which are otherwise legal and which shall be authorized in the following manner:

(1) The board of directors shall adopt a resolution recommending such sale, lease, exchange, or other disposition, specifying, to the extent that the board sees fit, any or all of the terms and conditions thereof and the consideration to be received by the bank or trust company therefor and directing the submission thereof to a vote at a meeting of shareholders, which may be either an annual or a special meeting;

(2) Written notice shall be given to each shareholder of record, whether or not entitled to vote at such meeting, in the manner provided in Code Section 7-1-6, and, whether the meeting is an annual or a special meeting, shall state that the purpose, or one of the purposes, is to consider the proposed sale, lease, exchange, or other disposition. The notice shall fairly summarize the material features of the proposed transaction and shall contain, where applicable, a clear and concise statement that, if the sale, lease, exchange, or other disposition is effected, shareholders may claim the rights of dissenting shareholders under this chapter;

(3) At such meeting the shareholders may authorize such sale, lease, exchange, or other disposition and may approve or fix, or may authorize the board of directors to fix, any or all of the terms and conditions thereof and the consideration to be received by the bank or trust company therefor. Such authorization shall require the affirmative vote of the holders of a majority of the shares of the corporation entitled to vote thereon, unless any class of shares is entitled to vote thereon as a class, in which event such authorization shall require the affirmative vote of the holders of a majority of the shares of each class of shares entitled to vote thereon as a class and of the total shares entitled to vote thereon. Any class of shares shall be entitled to vote as a class if the resolution proposing the sale, lease, exchange, or other disposition contains any provision which, if contained in a proposed amendment to the articles, would entitle such class of shares to vote as a class;

(4) If the shareholders approve the proposed sale or other disposition, the bank or trust company shall make application to the department for approval thereof in such form as may be specified by the department. The department shall, in its discretion, approve the sale or other disposition if the proposal is in conformity with law and if the interests of the public, depositors, trust beneficiaries, and other creditors of the bank or trust company are adequately protected;

(5) After such authorization by a vote of shareholders and by the department, the board of directors, nevertheless, in its discretion, may abandon such sale, lease, exchange, or other disposition of assets, subject to the rights of third parties under any contracts relating thereto, without further action or approval by shareholders;

(6) In the case of a sale, lease, exchange, or other disposition of all, or substantially all, the property and assets of a bank or trust company, a notice shall be published in each county in which the bank or trust company has an office engaged in the banking or trust business in the manner prescribed by Code Section 7-1-532.

§ 7-1-572

A shareholder of a bank or trust company shall have the right to dissent from any sale, lease, exchange, or other disposition of all, or substantially all, the property and assets of a bank or trust company pursuant to Code Section 7-1-571, except for a sale wholly for cash pursuant to a plan by which all, or substantially all, of the net proceeds of the sale will be distributed to the shareholders in accordance with their respective interests within one year after the date of the sale. The shareholders' right of dissent shall be exercised as provided in Chapter 2 of Title 14, known as the “Georgia Business Corporation Code.”

§ 7-1-590

As used in this part, the term:

(1) “Bank” and “bank holding company” shall have the same meaning as in Part 18 of this article. A “banking business” is the business which a bank is authorized to do pursuant to this title. The power to receive deposits or the performance of any transaction directly or through an affiliate or agent relative to a deposit account shall be presumed to constitute a banking business.

(2) “Deposit production office” means a form of a representative office with the authority to solicit deposits, provide information about deposit products, and assist consumers to complete the application forms to open deposit accounts, provided that such office does not open deposit accounts, take deposits, or conduct any other banking business.

(3) “Domicile” means the home state as defined in paragraph (12) of Code Section 7-1-621 where a bank is chartered or where a bank holding company is incorporated.

(4) “Loan production office” is a form of a representative office, where the solicitation of loans or of leases of personal property may occur, but not the closing of loans, the disbursement of loan proceeds, nor any other banking business. It shall be established and registered as a representative office.

(5) “Representative office” is an office established by a bank, a bank holding company, or an agent or subsidiary of either for the purpose of conducting business activities other than a banking business and includes, but is not limited to, deposit production offices, loan production offices, and trust production offices. It shall not be considered to be a branch office or main office.

(6) “Trust production office” means a trust sales office of a qualifying individual or corporate fiduciary which office is not performing fiduciary activities. Sales activities shall consist primarily of marketing or soliciting in this state using mail, telephone, or electronic means or in person to act or propose to act as a fiduciary.

§ 7-1-591

(a) A bank domiciled in this state and operating under the laws of this state or a subsidiary of such bank may establish a representative office anywhere in the state upon registering with the department. A bank holding company domiciled in this state and operating under the laws of this state or a nonbank subsidiary of such bank holding company may establish a representative office anywhere in this state upon registering with the department.

(b) Subject to any limitation or restrictions of the host state and upon registering the representative office with the department, a Georgia chartered bank may conduct any activities at any representative office outside Georgia that are authorized by Georgia law or that are permissible for a bank chartered by the host state where the representative office is located, except to the extent such activities are expressly prohibited by the laws of this state or by any regulation or order of the commissioner applicable to the Georgia chartered bank and except where the activity is one that requires approval from the department, in which case such approval must be secured; provided, however, that the commissioner may waive any prohibition or requirement for approval if he or she determines, by order or regulation, that the involvement of out-of-state representative offices of the Georgia chartered bank in particular activities would not threaten the safety or soundness of such bank.

§ 7-1-592

A bank or bank holding company domiciled in this state and operating under the laws of the United States or domiciled outside this state and operating under the laws of such other state or territory or of the United States, or its subsidiary, may establish representative offices anywhere in this state, provided that such bank or bank holding company conforms to the requirements of its primary regulator. The permissible activities conducted at such a representative office are governed by federal law if the bank is a national bank or by the law of the state or territory where the bank is domiciled if chartered by another state, except to the extent such activities are expressly prohibited by the laws of this state or by any regulation of the commissioner.

§ 7-1-593

(a) Prior to closing a representative office, a bank, bank holding company, or a subsidiary of a bank or bank holding company shall post notice of the closing as required by Code Section 7-1-110.1.

(b) The department may review the operations of any representative office annually or at such greater frequency as it deems necessary to assure that the office does not transact a banking business.

§ 7-1-600

As used in this part, the term:

(1) “Bank” means any moneyed corporation authorized by law to receive deposits of money and commercial paper, to make loans, to discount bills, notes, and other commercial paper, to buy and sell bills of exchange, and to issue bills, notes, acceptances, or other evidences of debt, and shall include incorporated banks, savings banks, banking companies, trust companies, and other corporations doing a banking business and may include corporations who provide some or all of the financial services listed in this paragraph by technological means in lieu of or in addition to traditional geographically based delivery systems but, unless the context otherwise indicates, shall not include national banks or similar corporations. Such term shall include “main office” and any “branch office,” unless the context indicates that it does not.

(2) “Bank holding company” means “bank holding company” as defined in Code Section 7-1-605.

(3) “Banking office” or “banking location” means either a main office or a branch office.

(4) “Banking services” shall include all those offerings or services resulting from the exercise of banking powers as granted to banks in this title or by other applicable federal or state law or regulation.

(5) “Branch office” means any location of a bank other than the main office where banking services are offered to the public. It does not include a representative office as defined in Code Section 7-1-590 or a bank extension as defined in Code Section 7-1-603. The department may provide by regulation that certain other activities do or do not constitute the formation of a branch office.

(6) “Main office” means the principal banking location of a bank as such location appears in the records of the department. A bank shall indicate its principal banking location with the department, and if it fails to do so, the department shall choose a banking location of such bank to be the main office and shall so notify such bank.

§ 7-1-601

(a) Branch offices may be established by banks doing a lawful banking business in Georgia with the prior approval of the department as follows:

(1) New or additional branch offices may be established de novo in the manner provided in Code Section 7-1-602;

(2) New or additional branch offices may be established through merger, share exchange, consolidation, or sale of assets pursuant to Part 14, 15, 16, 19, or 20 of this article;

(3) A bank may acquire a branch office from another bank without acquisition of the entire bank; or

(4) A bank with two or more existing banking offices in Georgia may redesignate its existing main office as a branch office in accordance with the procedures established by the department.

(b) A bank not doing a lawful banking business in Georgia may become the owner of a branch office in Georgia provided such transaction is consummated under Section 12 or 13 of the Federal Deposit Insurance Act, 12 U.S.C. Section 1811, et seq., as amended.

(d) Each branch office will operate under the control and direction of the board of directors and executive officers of the bank, and the bank shall be responsible for adequately staffing the branch office to conduct the business of the branch office in accordance with this chapter, federal law, and the rules and regulations of the department.

§ 7-1-602

(a) Application to establish a branch office shall be made to the department in such form as it may prescribe from time to time. The department shall exercise its discretion in its consideration of the application; but the department shall not approve the application until it has ascertained to its satisfaction that the public need and advantage will be promoted by the establishment of the proposed branch office, based upon the following factors:

(1) Reasonable opportunity for the proposed branch office to generate a sufficient profit;

(2) The character and fitness of the board of directors and management of the bank to command the confidence of the community and to warrant the belief that the business of the bank or trust company at the branch office will be honestly and efficiently conducted;

(3) The adequacy of the capital structure of the bank or trust company, particularly in view of the anticipated business to be generated by the proposed branch office; and

(4) The overall financial condition and safety and soundness of the applicant bank or trust company.

Where the department by rule, regulation, or written policy has provided for expedited processing of applications or for notice procedures, it may abbreviate its review of these criteria.

(b) After receipt of a complete application, the department shall have 30 days within which to approve or disapprove such application.

(c) The department may approve an application contingent upon the satisfaction of additional conditions, including the submission of information such as the date of opening and the capital outlay for the branch office. If the approval of a federal regulatory agency is required with respect to the branch office, the department may at its option withhold its written approval or disapproval until such federal approval is granted or denied or may withdraw its approval if the federal agency fails to act or refuses to grant approval. If the department disapproves the branch office, it shall notify the applicant of its disapproval and state generally in writing the unfavorable factors influencing its decision. The decision of the department is final, except that it may be subject to judicial review as provided in Code Section 7-1-90.

(d) The department may provide by regulation that a bank which meets certain financial and managerial criteria may, in lieu of application, file a written notification with the department at a time to be specified in such regulation.

(e) All lawfully established banking locations existing on July 1, 1999, other than a bank's main office, shall be known and shall qualify as branch offices.

(f) In the event of merger or consolidation of two or more banks, pursuant to Parts 14 and 15 of this article, the surviving or resulting bank shall designate a main office and may retain and continue to operate any or all banking locations of each constituent bank as branch offices. In the event of the purchase of substantially all of the assets of a bank, subject to the review and approval by the commissioner of such transaction, the purchasing bank may retain and continue to operate any or all banking locations of the selling bank as branch offices.

(g) The department's approval may be revoked if conditions in the approval have not been satisfied or if other violations of law occur as a result of the branch office's opening or operation.

§ 7-1-603

(a) An approved banking location may have an extension, which is not a branch or main office, at which banking activities may occur. The extensions described in this Code section do not require approval but may have certain restrictions or required notifications.

(b) The following are extensions:

(1) “Automated teller machine” means electronic equipment which performs routine banking transactions, including, but not limited to, the taking of deposits for the public at locations off premises of a bank's main or branch office under regulations prescribed by the commissioner. This term includes electronic equipment that utilizes, or has the capability to utilize, live video chat with offsite bank personnel who may assist with banking services, including, but not limited to, account initiation.

(2) “Cash dispensing machine” means for the purposes of this part and as used in paragraph (4) of subsection (b) of Code Section 7-1-241 an automated or electronic terminal which dispenses cash or scrip redeemable for goods and services or for cash, goods, and services. Such machines may provide account information but may not initiate intrabank transactions other than those necessary and incidental to the dispensing of cash.

(3) “Night depository” means a drop box where customers can make deposits or payments outside of normal banking hours.

(4) “Point-of-sale terminal” means electronic equipment located in nonbank business outlets to record electronically bank transactions occurring as a result of the sale of goods or services.

For purposes of this Code section, the terms “automated teller machine,” “point-of-sale terminal,” “cash dispensing machine,” and “night depository” shall not include personal communication devices such as telephones, computer terminals, modems, and other similar devices which are not accessible to the general public but are intended for use by a single bank customer. It is not the intent of this Code section to limit the ability of banks or other entities to utilize personal communication devices. The department may by regulation further define “automated teller machine,” “point-of-sale terminal,” “cash dispensing machine,” “night depository,” and “personal communication device” consistent with the objectives set forth in Code Section 7-1-3.

(1) Any federally insured bank may operate automated teller machines throughout the state. These machines may be operated individually by any bank or jointly on a cost-sharing basis by two or more banks;

(2) Any bank may operate cash dispensing machines throughout the state. Access to and use of cash dispensing machines may be available to all banks in this state on an individual or a shared basis;

(3) A night depository may be located anywhere in the state; and

(4) A point-of-sale terminal may be located anywhere in the state.

(d) An extension not defined in subsection (b) of this Code section is permitted, provided that such extension is located within the boundary lines of a single contiguous area of property owned or leased by the bank and used as a banking location, or if it is within 200 yards of such banking location. Banking services may be performed at the extension. Written notification to the department is required for such extension.

§ 7-1-604

No bank shall carry on or conduct or do a banking business in this state except in accordance with the provisions of this title or federal law directly applicable to the bank. A “banking business” is the business which a bank is authorized to do pursuant to this title.

§ 7-1-605

(a)(1) Except as provided in paragraph (5) of this subsection, “bank holding company” means any company which has control over any bank or over any company that is or becomes a bank holding company by virtue of this part.

(2) Any company has “control” over a bank or over any company if:

(A) The company directly or indirectly or acting through one or more other persons owns, controls, or has power to vote 25 percent or more of any class of voting securities of the bank or company;

(B) The company controls in any manner the election of a majority of the directors or trustees of the bank or company;

(C) The commissioner determines, after notice and opportunity for hearing, that the company directly or indirectly exercises a controlling influence over the management or policies of the bank or company; or

(D) The company directly or indirectly owns, controls, or has power to vote more than 10 percent but less than 25 percent of any class of voting securities of the bank or company if no other company or person will own, control, or hold the power to vote a greater percentage of that class of voting securities immediately after the transaction.

(3) For the purposes of any proceeding under subparagraph (C) of paragraph (2) of this subsection, there is a presumption that any company which directly or indirectly owns, controls, or has power to vote less than 5 percent of any class of voting securities of a given bank or company does not have control over that bank or company.

(4) In any administrative or judicial proceeding under this part, other than a proceeding under subparagraph (C) of paragraph (2) of this subsection, a company may not be held to have had control over any given bank or company at any given time unless that company, at the time in question, directly or indirectly owned, controlled, or had power to vote 5 percent or more of any class of voting securities of the bank or company, or had already been found to have control in a proceeding under subparagraph (C) of paragraph (2) of this subsection.

(5) Notwithstanding any other provision of this subsection:

(A) No bank and no company owning or controlling voting shares of a bank is a bank holding company by virtue of its ownership or control of shares in a fiduciary capacity, except as provided in paragraphs (2) and (3) of subsection (c) of this Code section. For the purpose of the preceding sentence, bank shares shall not be deemed to have been acquired in a fiduciary capacity if the acquiring bank or company has sole discretionary authority to exercise voting rights with respect thereto; and

(B) No company is a bank holding company by virtue of its ownership or control of shares acquired in securing or collecting a debt previously contracted in good faith until two years after the date of acquisition.

(6) For the purposes of this part, any successor to a bank holding company shall be deemed to be a bank holding company from the date on which the predecessor company became a bank holding company.

(b) As used in this Code section and in Code Sections 7-1-606 through 7-1-608, the term:

(1) “Bank” means the same as defined in Code Section 7-1-600.

(2) “Company” means any corporation, limited liability company, partnership, business trust, association, commercial entity regardless of organizational structure, or any other trust unless by its terms it must terminate within 25 years or not later than 21 years and ten months after the death of individuals living on the effective date of the trust, but shall not include any corporation the majority of the shares of which are owned by the United States or by any state or any qualified family partnership as defined in the federal Bank Holding Company Act of 1956, as amended.

(3) The “Georgia Bank Holding Company Act” shall mean and include this Code section and Code Sections 7-1-606 through 7-1-608 together with Part 19 of this article and any applicable rules and regulations.

(4) “Subsidiary,” with respect to a specified bank holding company, means:

(A) Any company 25 percent or more of whose voting shares (excluding shares owned by the United States or by any company wholly owned by the United States) is directly or indirectly owned or controlled by such bank holding company or is held by it with power to vote;

(B) Any company the election of a majority of whose directors is controlled in any manner by such bank holding company; or

(C) Any company with respect to the management or policies of which such bank holding company has the power, directly or indirectly, to exercise a controlling influence, as determined by the commissioner after notice and opportunity for hearing.

(5) “Successor” shall include any company which acquires directly or indirectly from a bank holding company shares of any bank, when and if the relationship between such company and the bank holding company is such that the transaction effects no substantial change in the control of the bank or beneficial ownership of such shares of such bank. The commissioner may, by regulation, further define the term “successor” to the extent necessary to prevent evasion of the purposes of this part.

(1) Shares owned or controlled by any subsidiary of a bank holding company shall be deemed to be indirectly owned or controlled by such bank holding company;

(2) Shares held or controlled directly or indirectly by trustees for the benefit of:

(A) A company;

(B) The shareholders or members of a company; or

shall be deemed to be controlled by such company; and

(3) Shares transferred by any bank holding company (or by the company which, but for such transfer, would be a bank holding company) directly or indirectly to any transferee that is indebted to the transferor, or has one or more officers, directors, trustees, or beneficiaries in common with or subject to control by the transferor, shall be deemed to be indirectly owned or controlled by the transferor unless the commissioner, after opportunity for hearing, determines that the transferor is not in fact capable of controlling the transferee.

§ 7-1-606

(a)(1) It shall be unlawful, except with the prior approval of the commissioner:

(A) For any action to be taken that causes any company to become a bank holding company;

(B) For any action to be taken that causes a bank to become a subsidiary of a bank holding company;

(C) For any bank holding company to acquire direct or indirect ownership or control of any voting shares of any bank if, after such acquisition, such company will directly or indirectly own or control 5 percent or more of the voting shares of such bank;

(D) For any bank holding company or subsidiary thereof, other than a bank, to acquire all or substantially all of the assets of a bank;

(E) For any bank holding company to merge or consolidate with, or enter into a share exchange with, any other bank holding company; or

(F) For any bank holding company to take any action which would violate the federal Bank Holding Company Act of 1956, as amended. 1

(2) Notwithstanding paragraph (1) of this subsection, these prohibitions shall not apply to:

(A) Shares acquired by a bank:

(i) In good faith in a fiduciary capacity, except where such shares are held under a trust that constitutes a company as defined in paragraph (2) of subsection (b) of Code Section 7-1-605 and except as provided in paragraphs (2) and (3) of subsection (c) of Code Section 7-1-605; or

(ii) In the regular course of securing or collecting a debt previously contracted in good faith, but such shares in securing or collecting any such previously contracted debt shall be disposed of within a period of two years from the date on which they were acquired;

(B) Additional shares acquired by a bank holding company in a bank in which such bank holding company owned or controlled a majority of the voting shares prior to such acquisition;

(C) A bank holding company of a national bank with its main office in Georgia acquiring a Georgia bank holding company, as such term is defined in paragraph (10) of Code Section 7-1-621, shall notify the department upon filing an application with the appropriate federal or state financial regulator. The notification requirements of this subparagraph shall be satisfied by furnishing the department with a copy of the application or applications filed with applicable bank supervisory agencies seeking approval for the proposed transaction and such other information as the department may request. In addition, the parties shall file with the department and the Secretary of State a certificate of approval of the acquisition by the appropriate supervisory agencies prior to consummation of the transaction. The department may, for good cause shown, object to the transaction by letter to the bank holding company of a national bank with its main office in Georgia, the Georgia bank holding company, and to the appropriate federal or state financial regulator before consummation of the transaction. In the event of such objection, the acquisition cannot be consummated without the parties obtaining the approval of the department; or

(D) Transactions for which the department has established by rule, regulation, or written policy a streamlined or alternative procedure, if such procedure specifically dispenses with the need for approval by the commissioner.

For the purpose of this paragraph, bank shares shall not be deemed to have been acquired in good faith in a fiduciary capacity if the acquiring bank or company has sole discretionary authority to exercise voting rights with respect thereto; but, in such instances, acquisitions may be made without prior approval of the commissioner if the commissioner, upon application filed within 90 days after the shares are acquired, approves retention or, if retention is disapproved, the acquiring bank disposes of the shares or its sole discretionary voting rights within two years after issuance of the order of disapproval.

(b)(1) The commissioner shall not approve nor shall any other procedure authorize:

(A) Any acquisition or merger or share exchange or consolidation under this Code section which would result in a monopoly or which would be in furtherance of any combination or conspiracy to monopolize or to attempt to monopolize the business of banking in any part of the State of Georgia; or

(B) Any other proposed acquisition or merger or share exchange or consolidation under this Code section whose effect in any section of the state may be substantially to lessen competition, or to tend to create a monopoly, or which in any other manner would be in restraint of trade, unless it finds that the anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served.

(2) In every case, the department shall take into consideration the financial and managerial resources and future prospects of the company or companies and the banks concerned.

(d) The commissioner shall not grant any such contemplated approval until he or she shall first cause reasonable public notice of the proposed action to be given in the area to be affected and until he or she shall first afford to the public an opportunity to submit, for the commissioner's consideration, information, objections, and opinions as to the proposed action and its effect. The notice requirement may not apply in the case of a streamlined procedure where the holding company meets certain qualifying criteria established by rule, regulation, or written policy of the department.

(e) Notwithstanding any other provisions of this part, a bank holding company which lawfully controls a bank or has received the requisite approvals under this Code section to acquire control of a bank may, with the approval of the commissioner, or as otherwise provided in this chapter or by departmental rule or regulation, either at the time such control is obtained or at any time thereafter, merge or consolidate such bank with another of such bank holding company's banking subsidiaries or have another of such bank holding company's banking subsidiaries acquire all or substantially all of the assets of such bank and consequently operate as a branch office of such other banking subsidiary. Nothing in this subsection shall be deemed to supersede, rescind, or modify any provision, requirement, or condition of this Code section which would otherwise be applicable to any acquisition of a banking subsidiary by a bank holding company under this Code section, nor shall it be deemed to supersede, rescind, or modify any provision, requirement, or condition of Part 14, 16, 19, or 20 of this article which would otherwise be applicable to the merger of banks or the acquisition or sale of all or substantially all of the assets of a bank.

1 12 U.S.C.A. § 1841 et seq.

§ 7-1-607

(a) On an annual basis, each bank holding company that controls a bank chartered by the department shall register with the commissioner on forms provided or prescribed by him or her, which may include such information with respect to the financial condition, operation, management, and intercompany relationships of the bank holding company and its subsidiaries and related matters as the commissioner may deem necessary or appropriate to carry out the purposes of this part.

(b) The commissioner is authorized to issue such regulations and orders as may be necessary to enable him or her to administer and carry out the purposes of this Code section.

(c) The commissioner from time to time may require reports under oath to keep him or her informed as to whether the provisions of this Code section and such regulations and orders thereunder issued by him or her have been complied with; may make examinations of each bank holding company and each subsidiary thereof, the cost of which may be assessed against and paid by such holding company; and shall, as far as possible, use the reports of examination made by the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, or the Board of Governors of the Federal Reserve System for the purposes of this Code section.

(d) Bank holding companies that control a bank chartered by the department and subsidiaries or affiliates thereof shall be regulated, controlled, and examined by the commissioner to the same extent that he or she regulates, controls, and examines state banks under his or her jurisdiction, which would be in addition to the authority of the Federal Reserve Board as fixed by the laws of the United States. The commissioner is authorized, directed, and required to promulgate, with precision, rules and regulations and investment procedures in the regulation, examination, and control of bank holding companies that control a bank chartered by the department.

§ 7-1-608

(a) It shall be unlawful for a bank holding company to acquire direct or indirect ownership or control of any voting shares of any bank, including any federal savings and loan association or federal savings bank, if, after such acquisition, such bank holding company will directly or indirectly own or control 5 percent or more of the voting shares of such bank, or for any company to become a bank holding company as a result of the acquisition of control of such bank, unless:

(1) The bank being acquired is either a “bank” for the purposes of the federal Bank Holding Company Act of 1956, as amended (12 U.S.C. Section 1841), or a “savings and loan,” a “state savings and loan,” a “savings bank,” or a “federal savings bank” whose deposits are insured under a federal deposit insurance program; and

(2) Such bank of the type described in paragraph (1) of this subsection has been in existence and continuously operating or incorporated as a bank for a period of three years or more prior to the date of acquisition.

(b) Notwithstanding the provisions of this Code section, the following activities are permitted. These activities regarding acquisitions by purchase and by formation are to be considered exceptions to the three-year age requirement contained in paragraph (2) of subsection (a) of this Code section:

(1) A bank holding company may acquire all or substantially all of the shares of a bank or trust company organized solely for the purpose of facilitating the acquisition of a federal or state chartered bank, savings and loan association, savings bank, or other corporation doing a banking business in this state or the trust department of such institutions, which has been in existence and continuously operating or incorporated as such an institution or exercising trust powers for the minimum period prescribed in subsection (a) of this Code section;

(2) A company may become a bank holding company by virtue of acquiring control of a bank if neither the company nor any other company controlled by or controlling such company controls any other bank domiciled in this state or elsewhere;

(3) A bank holding company may acquire control through formation of a de novo bank in Georgia, provided that departmental approval and any required federal approvals are obtained; and

(4) A de novo bank established or formed pursuant to paragraph (3) of this subsection shall be subject to the three-year age requirement contained in paragraph (2) of subsection (a) of this Code section. A bank holding company may, however, merge or consolidate a de novo bank which may be less than three years old and that is established pursuant to paragraph (3) of this subsection into another bank owned by that holding company.

(c) The department may waive the application of the three-year age requirement in the case of a bank that has been found by federal or state regulators to be:

(1) Insolvent or in an unsafe or unsound condition to transact its business;

(2) In a condition where it has generally suspended payment of its obligations without authority of law; or

(3) Under any plan, order, or agreement of any kind with the FDIC under Section 12, 13, or 38 of the Federal Deposit Insurance Act, 12 U.S.C. Section 1811, et seq., as amended.

(d) The commissioner may waive the three-year age requirement contained in paragraph (2) of subsection (a) of this Code section if the commissioner determines that the proposed acquisition will result in material improvement of the safety and soundness of an institution that is in less than satisfactory condition at the time of the proposed acquisition. No such waiver will be authorized unless the commissioner determines that the proposed acquisition will not present undue safety and soundness risks to the financial institutions involved. In making such determination, the commissioner shall consider the financial condition and regulatory safety and soundness ratings of the institutions affected and the ability of management to administer and supervise the resulting institution.

§ 7-1-609

The department may bring an appropriate civil action to enforce any provision of this part, whether by injunction or otherwise, in any superior court of this state having jurisdiction of one or more of the defendants.

§ 7-1-610

National banks shall have the same but no greater rights under or by virtue of this part than the rights granted to banks and trust companies organized under the laws of this state.

§ 7-1-611

Any bank, bank holding company, or company (as defined in Code Section 7-1-605) which violates subsection (a) of Code Section 7-1-601 or any provision of Code Section 7-1-602, Code Section 7-1-603, or Code Sections 7-1-605 through 7-1-608 shall be subject to civil monetary penalties of not less than $500.00 nor more than $5,000.00 unless it shall cease and desist therefrom within 60 days after notice of any such violation served on it by the department. Each day on which such violation occurs shall constitute a separate offense.

§ 7-1-620

This part governs the acquisition of banks having banking offices in Georgia by bank holding companies controlling bank subsidiaries having banking offices outside this state. It further governs the acquisition of banks having banking offices outside this state by bank holding companies controlling bank subsidiaries having banking offices in Georgia. It sets forth application, notice, and other related requirements. Acquisitions of banks having banking offices only in Georgia by bank holding companies controlling only bank subsidiaries having banking offices solely in Georgia are governed by the provisions of Code Sections 7-1-605 through 7-1-608.

§ 7-1-621

As used in this part, the term:

(1) “Acquire,” as applied to a bank holding company, means any of the following actions or transactions:

(A) The merger or consolidation with another bank holding company;

(B) The acquisition of the direct or indirect ownership or control of voting shares of another bank holding company or bank if, after such acquisition, such bank holding company will directly or indirectly own or control more than 5 percent of any class of voting shares of such bank holding company or bank;

(C) The direct or indirect acquisition of all or substantially all of the assets of another bank holding company or bank; or

(D) The taking of any other action that would result in the direct or indirect control of another bank holding company or bank.

“Acquire” shall also include a transaction where a bank subsidiary of a bank holding company merges or consolidates with, or acquires all or substantially all of the assets of, another bank.

(2) “Bank” means any “insured bank” as such term is defined in 12 U.S.C. Section 1813(h) of the Federal Deposit Insurance Act or any institution eligible to become such, provided that the term “bank” shall not include any “foreign bank” (which is defined as in 12 U.S.C. Section 3101 of the International Banking Act of 1978). The term “bank” as used in this part shall include any savings and loan association or state savings and loan association as such terms are defined in Code Section 7-1-4 and shall include federal savings banks and similar banking entities chartered under the laws of any state and whose deposits are insured under a federal deposit insurance program.

(3) “Bank holding company” means any company which is a bank holding company under Code Section 7-1-605.

(4) “Bank supervisory agency” means:

(A) The Office of Comptroller of Currency, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and any successor to those agencies; and

(B) The agency of a state with primary responsibility for chartering and supervising banks.

(5) “Banking office” or “banking location” means a main office or a branch office as such terms are defined in this chapter or any other office at which a bank accepts deposits.

(6) “Commissioner” means the commissioner of banking and finance then in office and, where appropriate, all of his or her successors and predecessors in office.

(7) “Control” means that which is set forth in Code Section 7-1-605.

(8) “Deposits” means, with respect to a bank, all demand, time, and savings deposits of individuals, partnerships, corporations, the United States government, and states and political subdivisions in the United States. Determinations of deposits shall be made by reference to regulatory reports of condition or similar reports filed by such bank with state or federal regulatory authorities.

(9) “Georgia bank” means a bank whose home state is Georgia.

(10) “Georgia bank holding company” means a bank holding company that:

(A) Has its principal place of business in the State of Georgia; and

(B) Is not controlled by a bank holding company other than a Georgia bank holding company.

(11) “Georgia state bank” means a bank chartered under the laws of the State of Georgia.

(12) “Home state” means any state in the United States:

(A) With respect to a state bank, the state by which the bank is chartered;

(B) With respect to a national bank, the state in which the main office of the bank is located; or

(C) With respect to a foreign bank, the state determined to be the home state of the foreign bank under 12 U.S.C. Section 3103(c) of the International Banking Act.

(13) “Home state regulator” means, with respect to an out-of-state state bank, the bank supervisory agency of the state in which such bank is chartered.

(14) “Host state” means a state, other than the home state of a bank, in which the bank maintains or seeks to establish and maintain a branch.

(15) “Insured depository institution” shall have the same meaning as set forth in 12 U.S.C. Section 1813(c)(2) and (3) of the Federal Deposit Insurance Act, provided that the term “insured depository institution” shall not include any “foreign bank” (which is defined as in 12 U.S.C. Section 3101 of the International Banking Act of 1978).

(16) “Interstate merger transaction” means:

(A) The merger or consolidation of banks with different home states and the conversion of branches of any bank involved in the merger or consolidation into branches of the resulting bank; or

(B) The purchase of all or substantially all of the assets of a bank whose home state is different from the home state of the acquiring bank.

(17) “Out-of-state bank” means a bank whose home state is not Georgia, but the term does not include a foreign bank.

(18) “Out-of-state bank holding company” means a bank holding company other than a Georgia bank holding company.

(19) “Out-of-state state bank” means a bank chartered under the laws of a state other than Georgia.

(20) “Principal place of business” of a bank holding company means the state of charter in which the aggregate deposits of the bank subsidiaries of such bank holding company are largest.

(21) “Resulting bank” means a bank that has resulted from an interstate merger transaction under Part 20 of this article.

(22) “State” means any state of the United States, including the District of Columbia.

(23) “Subsidiary” means that which is set forth in Code Section 7-1-605.

§ 7-1-622

(a) A bank holding company may acquire a bank in Georgia, and a bank holding company having its principal place of business in this state may acquire a bank having banking offices in another state, upon compliance with the provisions of Code Sections 7-1-605 through 7-1-611 and in particular Code Section 7-1-606, which provisions shall be expressly applicable to any such acquisition. Compliance with all applicable regulations, payment of applicable fees, and registration of the holding company shall be required. The restrictions of this Code section shall apply.

(b) Notwithstanding anything contained in subsection (a) of this Code section and subject to the permitted acquisitions of subsection (b) of Code Section 7-1-608, no bank or bank holding company may:

(1) Directly or indirectly acquire a Georgia bank unless such bank has been in existence and continuously operated or incorporated as a bank for a period of three years or more prior to the date of acquisition. Notwithstanding the foregoing, nothing shall prohibit an out-of-state bank holding company from acquiring all or substantially all of the shares of a Georgia bank organized solely for the purpose of facilitating the acquisition of a bank which has been in existence and continuously operated as a bank for the requisite three-year period; or

(2) Directly or indirectly acquire a bank having banking offices in Georgia if the applicant (including all insured depository institutions which are affiliates of the applicant), upon consummation of the acquisition, would control 30 percent or more of the total amount of deposits of insured depository institutions in this state. The commissioner may by regulation adopt a procedure whereby the foregoing limitations on concentration of deposits may be waived upon showing of good cause. This restriction shall not apply, in the discretion of the commissioner, to transactions complying with paragraph (1) of subsection (b) of Code Section 7-1-623.

(c) The commissioner must rule on any application seeking approval to engage in a transaction under this Code section not later than 90 days following the date of submission of a completed application seeking such approval. If the commissioner decides to hold a public hearing in connection with the application, the time limit specified may be extended to 30 days after the conclusion of the hearing.

(d) If any acquisition involves or takes the form of an interstate merger transaction, the banks involved must comply with filing and other requirements in Part 20 of this article in addition to subsection (b) of this Code section.

(e) This part is not intended to discriminate against out-of-state bank holding companies or against foreign bank holding companies in any manner that would violate Section 3(d) of the Bank Holding Company Act, 1 as amended by the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994.

1 12 U.S.C.A. § 1842(d).

§ 7-1-623

(a) Subject to any applicable restrictions an out-of-state bank holding company having a bank subsidiary with banking offices in Georgia may acquire a bank that does not have banking offices in this state, and an out-of-state bank holding company may acquire an out-of-state bank with branch offices in Georgia without the approval of the department.

(b) A bank holding company may engage in the transactions described in paragraphs (1) and (2) of this subsection without the necessity of complying with Code Section 7-1-622, provided that it notifies the department not less than 30 days following the consummation of the transaction.

(1) The acquisition of a Georgia bank, if such acquisition has been consummated with assistance from the Federal Deposit Insurance Corporation under Section 13(c) of the Federal Deposit Insurance Act, as amended, 12 U.S.C. Section 1823(c); or

(2) The acquisition of a Georgia bank, if such acquisition has been consummated in the regular course of securing or collecting a debt previously contracted in good faith, as provided in and subject to the requirements of Section 3(a) of the federal Bank Holding Company Act of 1956, as amended, 12 U.S.C. Section 1842(a). The bank or bank holding company must divest the securities or assets acquired within two years of the date of acquisition. The department may, in its discretion, permit the bank or bank holding company to retain such interest for up to three additional periods of one year each.

(c) An out-of-state bank holding company acquiring a Georgia bank holding company or Georgia state bank shall notify the department upon filing an application with the appropriate federal or state financial regulator. The notification requirements of this subsection shall be satisfied by furnishing the department with a copy of the application or applications filed with applicable bank supervisory agencies seeking approval for the proposed transaction and such other information as the department shall request. In addition, the parties shall file with the department and the Secretary of State a certificate of approval of the acquisition by the appropriate supervisory agencies prior to consummation of the transaction. The department may, for good cause shown, object to the transaction by letter to the out-of-state bank holding company, the Georgia bank holding company, and to the appropriate federal or state financial regulator before consummation of the transaction. In the event of such objection, the acquisition cannot be consummated without the parties obtaining the approval of the department.

§ 7-1-624

(a) Except as expressly permitted under this part, Part 20 of this article, or by federal law, no bank holding company may acquire a bank or a bank holding company controlling a bank chartered by the department.

(b) In the event any bank holding company makes an acquisition that is prohibited by this part, the commissioner shall require such bank holding company to divest itself immediately of its direct or indirect ownership or control of any Georgia banks or banking offices located in Georgia. The commissioner shall also have the power to enforce any other prohibitions in this part by requiring divestitures of nonconforming banks, bank holding companies, or assets. Alternatively, the commissioner shall have the power to impose fines and penalties or exercise such other remedies as are provided in this chapter, including, but not limited to, judicial actions.

§ 7-1-625

(a) Any Georgia bank holding company controlling a bank having banking offices in Georgia and any out-of-state bank holding company controlling a Georgia state bank shall be subject to the provisions of Code Sections 7-1-605 through 7-1-611 and the rules and regulations of the department applicable to bank holding companies.

(b) Any out-of-state bank holding company that has a bank subsidiary with banking offices in Georgia that is not otherwise organized under the laws of this state or qualified to do business in this state shall qualify to do business in this state as a foreign corporation.

(c) The department may enter into cooperative and reciprocal agreements with the bank regulatory authorities of any state or the United States for the periodic examination of bank holding companies and may accept reports of examination and other records from such authorities in lieu of conducting its own examinations. The department may enter into joint actions with other regulatory bodies having concurrent jurisdiction or may enter into such actions independently to carry out its responsibilities under this title and assure compliance with the laws of this state. Any examinations or reports originated by Georgia or by another bank supervisory agency shall be deemed and treated as confidential according to Georgia law, and such confidentiality shall not be affected by the sharing of the examinations or reports. The department shall not be obligated to provide or disclose such examinations and reports to any third party. Agreements to share such examinations or reports shall contain provisions for dealing with confidentiality and subpoenas.

§ 7-1-626

(a) It is the express intention of the Georgia General Assembly to provide a unified and orderly method of permitting limited interstate banking. Thus, if any provision of this part establishing the framework within which interstate banking may occur or providing for registration, approval, and supervisory powers of the department and the commissioner is determined by final, nonappealable order of any Georgia or federal court of competent jurisdiction to be invalid or unconstitutional, the remaining provisions of this part shall not be affected and shall continue to apply to any bank, bank holding company, foreign bank, or other person or circumstance.

(b) Nothing contained in this part shall be construed to amend or modify the provisions of any other part of this chapter governing the supervision or regulation of banks and bank holding companies, as defined in this part, or the organization and powers of the department and the commissioner with respect thereto as provided in such other parts.

§ 7-1-628

(a) It is the purpose of this part to permit interstate banking and branching by merger under Section 102 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, 1 subject to the limitations and requirements set out in this part and in Parts 14, 18, and 19 of this article.

(b) The scope of this part covers mergers where, upon consummation of the interstate merger transaction, the resulting bank will have banking locations in Georgia and at least one other state. It provides for certain approval, notice, and other requirements.

(c) In authorizing the expansion of interstate banking to this state, and in the interests of its citizens, the General Assembly finds that primary consideration should be given to the following:

(1) Affording protection and promoting convenience to bank depositors and other customers of financial institutions in this state;

(2) Preserving the advantages of a sound dual banking system and the competitive equality of state chartered institutions with federally chartered institutions; and

(3) Providing to the Department of Banking and Finance sufficient powers and responsibilities to implement these considerations.

(d) This part is not intended to discriminate against out-of-state bank holding companies or against foreign bank holding companies in any manner that would violate Section 3(d) of the Bank Holding Company Act, 2 as amended by the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994.

1 12 U.S.C.A. § 1831u.

2 12 U.S.C.A. § 1842(d).

§ 7-1-628.1

As used in this part, the term:

(1) “Bank” shall have the same meaning as “insured bank” in 12 U.S.C. Section 1813(h) of the Federal Deposit Insurance Act, provided that the term “bank” shall not include any “foreign bank” (which is defined as in 12 U.S.C. Section 3101 of the International Banking Act of 1978).

(2) “Bank holding company” shall have the same meaning as set forth in 12 U.S.C. Section 1841(a)(1) of the Bank Holding Company Act.

(3) “Bank supervisory agency” shall mean:

(A) Office of Comptroller of Currency, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and any successor to those agencies; and

(B) The agency of a state with primary responsibility for chartering and supervising banks.

(4) “Branch” in the context of this part shall have the same meaning as “domestic branch” in 12 U.S.C. Section 1813(o) of the Federal Deposit Insurance Act. Nothing contained in this part shall be construed to amend or modify the provisions of any other part of this article.

(5) “Commissioner” means the commissioner of banking and finance then in office and, where appropriate, all of his or her successors and predecessors in office.

(6) “Control” means that which is set forth in Code Section 7-1-605.

(7) “Deposits” means, with respect to a bank, all demand, time, and savings deposits of individuals, partnerships, corporations, the United States government, and states and political subdivisions in the United States. Determinations of deposits shall be made by reference to regulatory reports of condition or similar reports filed by such bank with state or federal regulatory authorities.

(8) “Georgia bank” means a bank whose home state is Georgia.

(9) “Georgia bank holding company” means a bank holding company that:

(A) Has its principal place of business in the State of Georgia; and

(B) Is not controlled by a bank holding company other than a Georgia bank holding company.

(10) “Georgia state bank” means a bank chartered under the laws of the State of Georgia.

(11) “Home state” means:

(A) With respect to a state bank, the state by which the bank is chartered;

(B) With respect to a national bank, the state in which the main office of the bank is located; or

(C) With respect to a foreign bank, the state determined to be the home state of the foreign bank under 12 U.S.C. Section 3103(c) of the International Banking Act.

(12) “Home state regulator” means, with respect to an out-of-state state bank, the bank supervisory agency of the state in which such bank is chartered.

(13) “Host state” means a state, other than the home state of a bank, in which the bank maintains or seeks to establish and maintain a branch.

(14) “Insured depository institution” shall have the same meaning as set forth in 12 U.S.C. Section 1813(c)(2) and (3) of the Federal Deposit Insurance Act, provided that the term “insured depository institution” shall not include any “foreign bank” (which is defined as in 12 U.S.C. Section 3101 of the International Banking Act of 1978).

(15) “Interstate merger transaction” means:

(A) The merger or consolidation of banks with different home states and the conversion of branches of any bank involved in the merger or consolidation into branches of the resulting bank; or

(B) The purchase of all or substantially all of the assets of a bank whose home state is different from the home state of the acquiring bank.

(16) “Out-of-state bank” means a bank whose home state is not Georgia, but the term does not include a foreign bank.

(17) “Out-of-state bank holding company” means a bank holding company other than a Georgia bank holding company.

(18) “Out-of-state state bank” means a bank chartered under the laws of a state other than Georgia.

(19) “Principal place of business” of a bank holding company means the state of charter in which the aggregate deposits of the bank subsidiaries of such bank holding company are largest.

(20) “Resulting bank” means a bank that has resulted from an interstate merger transaction under this part.

(21) “State” means any state of the United States, including the District of Columbia.

(22) “Subsidiary” means that which is set forth in Code Section 7-1-605.

§ 7-1-628.2

Interstate merger transactions between out-of-state banks and Georgia banks including Georgia state banks shall be permitted provided that the applicable conditions, approvals, and filing requirements are met by participating banks and bank holding companies. The approval procedure for mergers involving banks having offices located only in this state are governed by Part 14 of this article. To the extent a bank participating in a merger is owned or controlled by a bank holding company, the provisions of Part 19 of this article shall also apply to the transaction.

§ 7-1-628.3

(a) Except as otherwise expressly provided in this subsection, an interstate merger transaction shall not be permitted under this part if, upon consummation of such transaction, the resulting bank (including all insured depository institutions that would be “affiliates,” as defined in 12 U.S.C. Section 1841(k) of the resulting bank) would control 30 percent or more of the total amount of deposits held by all insured depository institutions in this state. The 30 percent limitation shall not apply, in the discretion of the commissioner, to transactions complying with paragraph (1) of subsection (b) of Code Section 7-1-623. The commissioner may by regulation adopt a procedure whereby the foregoing limitations on concentration of deposits may be waived upon showing good cause.

(b) An interstate merger transaction shall not be permitted under this part unless the Georgia bank shall have been in existence and continuously operating or incorporated as a bank on the date of such merger or acquisition for a period of at least three years, subject to any applicable exception contained in Code Section 7-1-608.

§ 7-1-628.4

(a) A Georgia state bank may enter into an interstate merger transaction where the Georgia state bank is the resulting bank, and as a result the Georgia state bank may establish, maintain, and operate one or more branches in another state. The Georgia state bank must seek approval for the merger pursuant to the provisions in Part 14 of this article and must comply with federal law.

(b) An out-of-state bank may enter into an interstate merger transaction with a Georgia bank, and an out-of-state bank resulting from such transaction may maintain and operate branches in Georgia. The requirements of Code Section 7-1-628.5 shall be met by the resulting bank. In order to consummate such a merger with a resulting out-of-state state bank, a Georgia state bank shall comply with Code Sections 7-1-531 through 7-1-533 and 7-1-537, except that the format of the articles of merger submitted in accordance with Code Section 7-1-532 may be in conformity with the resulting bank's home state law if such law requires a format different from that specified by Code Section 7-1-532. A Georgia state bank shall comply with Code Section 7-1-534 if a national bank or a federal savings bank is to be the resulting bank.

(c) Any out-of-state bank which lawfully establishes a branch in this state or which subsequently becomes the owner of or controls interstate branches in Georgia, if such transaction is not covered by subsection (a) or (b) of this Code section, shall comply with the requirements in Code Section 7-1-628.5.

§ 7-1-628.5

(a) An out-of-state bank that will be the resulting bank pursuant to an interstate merger transaction involving a Georgia state bank shall notify the commissioner of the proposed merger not later than the date on which it files an application for an interstate merger transaction with the responsible federal bank supervisory agency, provide such information as required by rule or regulation or as the commissioner may otherwise specify, and pay any filing fee required by regulation.

(b) Prior to consummation of an interstate merger between an out-of-state bank and a Georgia state bank, the resulting bank shall provide the commissioner with satisfactory evidence of all required approvals from all relevant bank supervisory agencies.

(c) Prior to consummation of an interstate merger between an out-of-state bank and a Georgia state bank, and continuously thereafter, the out-of-state bank shall maintain deposit insurance issued by a federal public body while it has a branch or any other location in this state.

(d) Any holding company of the resulting bank from an interstate merger transaction between an out-of-state bank and a Georgia state bank shall comply with Part 19 of this article and Code Sections 7-1-605 through 7-1-611.

§ 7-1-628.6

(a) An out-of-state state bank which establishes and maintains one or more branches in Georgia under this part may conduct any activities at such branch or branches that are authorized under the law of this state for Georgia state banks.

(b) A Georgia state bank may conduct any activities at any branch outside Georgia that are authorized by Georgia law or that are permissible for a bank chartered by the host state where the branch is located, except to the extent such activities are expressly prohibited by the laws of this state or by any regulation or order of the commissioner applicable to the Georgia state bank and except where the activity is one that requires approval from the department, in which case such approval must be secured; provided, however, that the commissioner may waive any prohibition or requirement for approval if he or she determines, by order or regulation, that the involvement of out-of-state branches of the Georgia state bank in particular activities would not threaten the safety or soundness of such bank.

(c) An out-of-state bank that has established or acquired a branch in Georgia under this part may establish or acquire additional branches in Georgia to the same extent, but to no greater extent, that any Georgia bank may establish or acquire a branch in Georgia under applicable federal and state law.

§ 7-1-628.7

(a) To the extent consistent with subsection (c) of this Code section, the commissioner may make such examinations of any branch established and maintained in this state by an out-of-state state bank as the commissioner may deem necessary to determine whether the branch is being operated in compliance with the laws of this state. The provisions of Parts 3 and 4 of Article 1 of this chapter are applicable to examinations.

(b) The commissioner may prescribe requirements for periodic reports regarding any out-of-state bank that operates a branch in Georgia pursuant to this part. The required reports shall be provided by such bank or by the bank supervisory agency having primary responsibility for such bank. Any reporting requirements prescribed by the commissioner under this subsection shall be: (1) consistent with the reporting requirements applicable to Georgia state banks; and (2) appropriate for the purpose of enabling the commissioner to carry out his or her responsibilities under this Code section.

(c) The commissioner may enter into cooperative, coordinating, and information sharing agreements with any other bank supervisory agencies or any organization affiliated with or representing one or more bank supervisory agencies with respect to the periodic examination or other supervision of any branch in Georgia of an out-of-state state bank or of any branch of a Georgia state bank in any host state, and the commissioner may accept such parties' reports of examination and reports of investigation in lieu of conducting his or her own examinations or investigations. Agreements to share should contain provisions for dealing with confidentiality and subpoenas.

(d) Notwithstanding any other law to the contrary, the commissioner may enter into contracts with any bank supervisory agency that has concurrent jurisdiction over a Georgia state bank or an out-of-state state bank operating a branch in this state pursuant to this part to engage the services of such agency's examiners at a reasonable rate of compensation, to provide the services of the commissioner's examiners to such agency at a reasonable rate of compensation, or for another arrangement that the commissioner may find expedient and reasonable.

(e) If appropriate in the discretion of the commissioner and pursuant to an interstate agreement with the pertinent host state regulator for the purpose of facilitating the regulation and supervision of a multistate Georgia state bank, the department may approve and collect from its chartered bank, as agent and home state regulator, examination and supervision fees assessed by a state where the Georgia bank has a branch and may remit such fees to the assessing out-of-state regulator. Such fees shall not be considered revenue payable to the State of Georgia.

(f) In order to facilitate or implement interstate efforts to regulate and supervise a multistate Georgia state bank, the department may adjust its normal supervision examination fee assessment schedule and other rates and charges. Such adjustment may include any examination and supervision fees assessed by host state regulators, pursuant to subsection (e) of this Code section, as a part of the standard supervision and examination assessment.

(g) The commissioner may enter into joint examinations or joint enforcement actions with other bank supervisory agencies having concurrent jurisdiction over any branch in Georgia of an out-of-state state bank or any branch of a Georgia state bank in any host state, provided that the commissioner may at any time take such actions independently if he or she deems such actions to be necessary or appropriate to carry out his or her responsibilities under this part or to ensure compliance with the laws of this state, but provided, further, that, in the case of an out-of-state state bank, the commissioner shall recognize the exclusive authority of the home state regulator over corporate governance matters and safety and soundness matters.

(h) Each out-of-state bank that maintains one or more branches in this state may be assessed and, if assessed, shall pay supervisory and examination fees in accordance with the laws of this state and regulations of the department.

(i) Any examinations or reports originated by Georgia or by another bank supervisory agency shall be deemed and treated as confidential according to Georgia law, and such confidentiality shall not be affected by the sharing of the examination or reports. The department shall not be obligated to provide or disclose such examinations or reports to any third party.

§ 7-1-628.8

(a) A “de novo branch” means a branch of a bank which:

(1) Is originally established by the bank as a branch; and

(2) Does not become a branch of the bank as a result of the acquisition of another bank or of a branch of another bank or as the result of the merger, consolidation, or conversion of any such bank or branch.

(b) An out-of-state bank that does not have a branch in Georgia and whose deposits are federally insured may, upon obtaining the necessary approvals from its home state regulator, establish and maintain a de novo branch in this state to the extent that any Georgia bank could establish such a de novo branch.

(c) A Georgia state bank may establish and maintain a de novo branch in another state. Such Georgia state bank shall comply with the provisions of this article, including, but not limited to, obtaining approval from the department prior to establishing the branch.

§ 7-1-628.9

(a) An out-of-state bank that does not have a branch in Georgia and whose deposits are federally insured may, upon obtaining the necessary approvals from its home state regulator, establish and maintain a branch in this state through the acquisition of a branch.

(b) A Georgia state bank may establish and maintain a branch in another state through the acquisition of a branch in compliance with the provisions of this article, including, but not limited to, obtaining approval from the department prior to acquiring the branch.

§ 7-1-628.10

If the commissioner determines that a branch maintained by an out-of-state state bank in this state is being operated in violation of any provision of the laws of this state, the commissioner shall have the authority to take all such enforcement actions as he or she would be empowered to take if the branch were a Georgia state bank, provided that the commissioner shall promptly give notice to the home state regulator of each enforcement action taken against an out-of-state state bank and, to the extent practicable, shall consult and cooperate with the home state regulator in pursuing and resolving said enforcement action.

§ 7-1-628.11

The commissioner may promulgate such regulations and may provide for the payment of such reasonable filing, application, assessment, and administrative fees as he or she determines to be necessary or appropriate in order to implement the provisions of this part.

§ 7-1-628.12

In order to determine compliance with Georgia law on deposit concentration limits or other areas of state compliance, reporting by out-of-state banks may be required by the commissioner.

§ 7-1-628.14

(a) If any provision of this part or the application of such provision is found by any court of competent jurisdiction in the United States to be invalid as it pertains to any bank, bank holding company, foreign bank, or other person or circumstances, or is found to be superseded explicitly by federal law, the remaining provisions of this part shall not be affected and shall continue to apply to any bank, bank holding company, foreign bank, or other person or circumstance.

(b) Nothing contained in this part shall be construed to amend or modify the provisions of any other part of this chapter governing the supervision or regulation of banks and bank holding companies, as defined in this chapter, or with respect to the organization and powers of the department and the commissioner as provided in such other parts.

§ 7-1-628.15

(a) All banks engaged in interstate banking and branching in this state shall be obliged to adhere to the tax laws and regulations of Title 48 which pertain to such activities.

(b) The Department of Revenue shall address the tax treatment of financial organizations before June 1, 1997, in order to provide timely and appropriate taxation of banks which have adjusted their corporate structures according to this part and federal law.

§ 7-1-630

(a) Any number of persons, not less than eight, having a common bond, as defined in subsection (b) of this Code section, may incorporate for the purpose of organizing a credit union in accordance with this article. The persons so desiring to become incorporated shall execute articles which shall set forth the following:

(1) The name of the proposed credit union;

(2) The territory in which it will operate;

(3) The location where its initial registered office will be located;

(4) The names and addresses of the subscribers, their occupation, length of service, and that each has subscribed to one share and paid for same;

(5) The names and addresses of the original directors;

(6) The proposed field of membership specified in detail and having the same common bond as the subscribers;

(7) That the purpose and nature of the business are to conduct a credit union with the rights and powers granted by this article; and

(8) The term of the existence of the credit union, which shall be perpetual unless otherwise limited.

(b) For purposes of this article, “common bond” is described as that specific relationship of occupation, association, or interest; residence or employment within a well-defined neighborhood, community, or rural district; employees of a common employer; or members of a bona fide cooperative, educational, fraternal, professional, religious, rural, or similar organization which tends to create a mutual interest between persons sharing the relationship. Persons related by blood, adoption, or marriage to or living in the same household with a person within such common bond and the surviving spouses of deceased members shall also be considered within the common bond.

(c) The subscribers shall file the articles with the department together with the fee specified in Code Section 7-1-862. The department shall certify a copy of the articles and return it to the subscribers.

(d) The subscriber shall file with the department a certificate from the Secretary of State attesting that the name of the proposed credit union has been reserved as authorized by Code Section 7-1-131.

(e) The subscriber shall file with the department a copy of the proposed bylaws setting forth the following:

(1) The date of the annual meeting, the manner of conducting the same, the number of members constituting a quorum and regulations as to voting, and the manner of notification of the meeting, which shall comply with Code Section 7-1-6;

(2) The number of directors, which must be not less than five nor more than 25, all of whom must be members, and their powers and duties, together with the duties of the officers elected by the board of directors;

(3) The qualifications for membership of those coming within the initial common bond as required by this article;

(4) The conditions under which deposits are received and withdrawn; and

(5) The charges which shall be made, if any, for failure to meet obligations punctually; whether or not the credit union shall have the power to borrow; and such other matters consistent with this article as may be requisite to the organization and operation of the proposed credit union.

(f) The subscriber shall pay such fee as shall be established by regulation of the department to defray the cost of the investigation required by Code Section 7-1-632, provided that the department shall not be required to set such fee if in its judgment the fee would discourage the organization of credit unions under this article.

(g) The subscriber shall select at least five qualified persons who agree to serve on the board of directors. A signed agreement to serve in these capacities until the first annual meeting or until the election of their successors, whichever is later, shall be executed by those who so agree and filed with the department along with the proposed bylaws.

§ 7-1-632

(a) The department shall make an appropriate investigation of the articles and bylaws for the purpose of determining:

(1) Whether the articles and bylaws conform to this article;

(2) The general character and qualifications of the subscribers and the financial stability and future prospects of the sponsoring company, if any;

(3) The economic advisability of establishing the proposed credit union and such other facts and circumstances bearing on the proposed credit union as in the opinion of the department may be relevant;

(4) That a common bond exists in accordance with Code Section 7-1-630; and

(5) That the subscribers and person or corporation sponsoring the credit union are in agreement as to the services, if any, that the sponsor will provide.

(b) If the department determines to its satisfaction that the proposed credit union meets the criteria set forth above, it shall, within 90 days from receipt of the articles and in compliance with Code Section 7-1-630, send a copy of the articles and written approval of the articles to the Secretary of State after making such changes in the articles or bylaws consistent with this article and with the consent of the subscribers that it deems appropriate. Such approval shall indicate any changes made to the articles including changes from the proposed field of membership. If the department shall disapprove the articles, the procedures of subsection (b) of Code Section 7-1-635 shall be followed.

(c) Upon receipt of the approval of the department, the Secretary of State shall thereupon issue a certificate attesting to the incorporation of the credit union. The credit union shall, however, confine itself to organizational activities until it receives a permit to do business.

§ 7-1-633

(a) Within 30 days after receipt of the certificate of incorporation from the Secretary of State, an organizational meeting of the board of directors named in the articles of incorporation shall be held for the purpose of accepting the certificate and bylaws, appointing a credit committee or, in lieu thereof, loan officers and an audit committee, naming the president, and electing or appointing the officers, as provided in Code Section 7-1-655, who shall serve until the first directors' meeting after the first annual meeting. Notice of the meeting shall be given at least five days prior to the date of the meeting.

(b) When the organization has been completed, the credit union shall notify the department of this fact and may commence business subject to its obtaining deposit insurance as required in Code Section 7-1-666.

§ 7-1-634

(a) Amendments to the bylaws of a credit union may be adopted and amendments of the articles may be requested by the affirmative vote of two-thirds of the authorized number of members of the board of directors at any duly held meeting thereof if the members of the board have been given prior written notice of said meeting and the notice has contained a copy of the proposed amendment or amendments. No amendment of the bylaws or of the articles shall become effective until approved in writing by the department.

(b) Every proposed amendment of the articles shall be filed with the department together with the fee specified in Code Section 7-1-862. Proposed amendments of the bylaws shall be filed with the department.

(c) The credit union may amend its bylaws to change its field of membership by adding additional groups of persons subject to the following conditions:

(1) Each new group must have a common bond that meets one of the descriptions in subsection (b) of Code Section 7-1-630; and

(2) The credit union must pay such fee as may be established by the department to defray the cost of investigation.

(d) The department shall grant or deny approval of a complete and accepted application to amend the bylaws within 90 days, subject to safety and soundness and other criteria established by the department for these applications.

(e) The department shall maintain a permanent record of any approved amendment to the bylaws of a credit union which changes the field of membership proposed in the original articles or as subsequently amended.

§ 7-1-635

(a) The department shall, in its discretion, approve or disapprove of proposed amendments to the articles or to the bylaws within 90 days after they are submitted by the credit union and within that time shall so advise the Secretary of State of any changes to the articles and inform the credit union in writing of its approval or disapproval.

(b) If the department should disapprove any articles or proposed amendments to articles or bylaws, it shall state the reasons for its disapproval. The subscribers or credit union shall have reasonable time, not more than 90 days from the date of disapproval or such additional time as the department may allow, to correct any matters causing its disapproval. If such matter is corrected, the department shall then advise the Secretary of State and credit union in writing of its approval of changes to the articles or the credit union alone in writing of its approval in the case of amendment of the bylaws.

(c) Final action by the department in approving or disapproving articles or amendments thereto or to the bylaws shall be conclusive, except that it may be subject to judicial review under Code Section 7-1-90.

§ 7-1-635.1

(a) A credit union organized in another state may conduct business and establish a place of business in this state with the approval of the department. The department must find that the out-of-state credit union:

(1) Is a credit union organized under laws of a state other than the State of Georgia or of the United States, which state grants similar authority to credit unions organized under the laws of this state;

(2) Is financially solvent and operates in conformance with the laws and regulations of its charter jurisdiction; and

(3) Has deposit insurance issued by a federal public body that is comparable to that required for credit unions chartered in this state.

(b) The out-of-state credit union must agree to:

(1) Grant loans at rates not in excess of the rates permitted for credit unions incorporated under the laws of Georgia;

(2) Comply with the same consumer protection provisions that credit unions incorporated under this chapter must obey; and

(3) Designate and maintain an agent for the service of process in this state.

(c) The department may examine the operations of any out-of-state credit union for the purpose of determining that the scope of its activities does not exceed that allowed pursuant to this chapter and that the facility is otherwise operating in compliance with the applicable laws of this state. The department may by regulation establish minimum requirements for the maintenance of books and records in sufficient form to enable the department to carry out its responsibilities under this Code section.

(d) The department may enter into cooperative and reciprocal agreements with the credit union regulatory authority of any government for the periodic examination of credit union offices and facilities of any kind located within this state and may accept reports from such authorities in lieu of conducting its own examination for compliance with the laws of this state.

(e) A credit union which is approved under this Code section shall be exempt from the requirements of Article 15 of Chapter 2 of Title 14.

§ 7-1-636

(a) Nothing in this chapter shall be construed to impair the validity of the articles of a credit union existing on April 1, 1975.

(b) Each credit union existing on April 1, 1975, shall have perpetual duration unless its articles are amended under this chapter to provide for a limited period of duration.

§ 7-1-640

(a) The department may, in its discretion, appoint itself or a third party as conservator for a credit union when the credit union:

(1) Is insolvent or in an unsafe and unsound condition;

(2) Has suspended payment of obligations without authority of law;

(3) Has violated its articles or an order, statute, rule, or regulation and the department determines that its continued control of its own affairs threatens injury to the public, the financial community, members, or creditors; or

(4) Requests the department, by its board of directors, to appoint a conservator for the benefit of members or creditors.

(b) The right of the department to act as conservator of a credit union shall be in addition to all other rights, remedies, and powers of the department.

(c) The department may, in its discretion, before or after taking conservatorship, petition the principal court of a credit union for the appointment of a conservator pursuant to Code Section 7-1-643.

(d) The conservator shall conduct the business of the credit union and take steps toward the removal of the causes and conditions that have necessitated the appointment of a conservator. The conservator shall be immediately authorized to:

(1) Assume all powers of the members, directors, officers, and committees of the credit union;

(2) Take charge of the credit union and all of its property, books, records, and effects;

(3) Take any and all actions to operate the credit union in its own name or to conserve its assets as directed by the department, including, but not limited to, terminating or adopting any executory contracts to which the credit union may be a party;

(4) Take all necessary measures to preserve, protect, and recover any assets or property of the credit union, including any claim or cause of action belonging to or which may be asserted by the credit union, and administer the same in its own name as conservator;

(5) File, prosecute, and defend any suit that has been filed or may be filed by or against the credit union that is deemed by the conservator to be necessary to protect all interested parties or any property affected thereby;

(6) Exercise all rights, powers, and duties conferred on the credit union by this chapter; and

(7) Take any other actions that are necessary or incidental to carrying out the role of conservator.

(e) The conservator shall make reports to the department from time to time as may be required by the department.

§ 7-1-641

(a) The department shall, immediately after appointing a conservator, file with the principal court of a credit union a certificate to be known as a certificate of appointment.

(b) The certificate of appointment shall set forth the basis for the department's appointment of a conservator and state the name of the conservator.

(c) If the department does not appoint a conservator prior to the date of the filing of the certificate of appointment or it appoints a new or additional conservator, the department shall file a supplement to the certificate of appointment setting forth such facts.

(d) The certificate of appointment and any supplement will be listed in the judgment index in the name of the credit union as defendant and the department as plaintiff.

§ 7-1-642

(a) All costs incident to conservatorship will be charged against the assets of the credit union to be allowed and paid as the department may determine.

(b) The department, its employees, and third parties acting as conservators are not subject to liability for actions related to a conservatorship, including, but not limited to, the appointment of a conservator, and no department funds shall be required to be expended on behalf of the credit union, its creditors, employees, or members, or any other party or entity.

§ 7-1-643

(a) Whenever any court, upon the initiation of the department or other person entitled by law to institute such proceedings, determines that a conservator should be appointed, for any reason whatsoever, it shall appoint the department as conservator. Except as provided in subsection (c) of this Code section, such court shall appoint only the department as conservator of a credit union.

(b) When appointed conservator by a court, the department shall serve in the same manner and with the same limitations and shall have the same rights, powers, and duties as if it were to become conservator without appointment by a court pursuant to Code Section 7-1-640. No court shall impose upon the department as conservator any duties or restrictions in conflict with this chapter.

(c)(1) In any proceeding for the appointment of a conservator of a credit union whose shares are insured by a public body of the United States, the court may, upon the recommendation of the department, whether or not the department is a party, appoint such public body as conservator.

(2) If a public body accepts the appointment, it shall have all the rights, powers, and duties of the department as conservator under this chapter and all the rights, powers, and duties as conferred by other applicable law.

(3) The posting of a bond shall not be required when a public body acts as conservator.

§ 7-1-644

(a) If the department appoints a conservator other than a public body of the United States that insures the shares of a credit union, an employee of the department, or the department itself, the conservator and any assistants shall provide a bond, payable to the credit union and executed by a surety company authorized to do business in this state.

(b) The amount of such bond shall be approved by the department and be in an amount to ensure the faithful discharge of duties in connection with the conservatorship and take into account the amount of money under the control of the conservator.

(d) Any person injured by a breach of the conditions on such bond has a right to bring a civil remedy in order to seek to collect on such bond.

(e) A bond of a credit union shall be deemed satisfactory if the department determines it covers a conservator and any assistants.

§ 7-1-645

(a) No later than ten days after the date a conservator is appointed pursuant to Code Section 7-1-640, a credit union may apply to its principal court for an order requiring the department to show cause why it should not be enjoined from continuing the conservatorship.

(b) If at any time the department determines that a credit union is not in a condition to continue business under a conservator, the department may appoint a receiver in accordance with Code Section 7-1-150.

(c) A conservator may conduct the business of a credit union and take steps toward the removal of the causes and conditions that have necessitated the appointment of a conservator until such time as:

(1) The department shall permit such credit union to continue business subject to such terms and conditions as may be imposed by the department;

(2) Such credit union is liquidated in accordance with the provisions of subsection (b) of this Code section; or

(3) Otherwise ordered by the principal court of such credit union.

(d) Except as provided in this chapter, no court shall take any action, except at the request of the department, to restrain or affect the exercise of powers or functions of a conservator.

§ 7-1-650

A credit union shall have, in addition to the powers common to all corporations under the laws of this state, the power to:

(1) Receive funds from its members or other financial institutions in the form of shares and deposits on accounts or as evidenced by certificates of deposit issued by the credit union;

(2) Receive savings deposits from nonmembers, provided that such deposits are:

(A) Insured by or through a federal public body or are expressly authorized by state or federal law;

(B) Made in such a manner as expressly authorized by the bylaws;

(D) Not bearing a greater rate of interest than the rate of interest paid to members for the same class of deposit;

(3) Make loans to members subject to approval by its credit committee or authorized employees pursuant to Code Section 7-1-658;

(4) On the authority of its board of directors or by employees authorized by the board of directors, invest:

(A) In general and direct obligations of the United States, including bonds and securities upon which payment of principal and interest is fully guaranteed by the United States; in general and direct obligations of any state or territorial government of the United States upon which payment of principal and interest is fully guaranteed by the state or territory; in general and direct obligations of counties, districts, and municipalities of any state or territorial government of the United States upon which payment of principal and interest is fully guaranteed by the issuing county, district, or municipality; obligations issued by banks for cooperatives, federal land banks, federal intermediate credit banks, federal home loan banks, the Federal Home Loan Bank Board, or any corporation designated in Section 846 of Title 31 of the United States Code as a wholly owned government corporation; or in obligations, participations, or other instruments of or issued by or fully guaranteed as to principal and interest by the Federal National Mortgage Association or the Government National Mortgage Association;

(B) Reserved;

(C) In loans to other credit unions, provided that the loans in the aggregate do not exceed 50 percent of the net worth of the lending credit union;

(D) By depositing its funds in banks, savings and loan associations, and credit unions; by purchasing certificates of deposit and savings certificates which such financial institutions are authorized to issue; by selling or purchasing federal or correspondent (daily) funds through such financial institutions; and by selling or purchasing whole loans or loan participations. The authorizations in this subparagraph shall be subject to limitations prescribed in regulations issued by the department; and

(E) In any other types of investments authorized by the department, provided that such investments shall not, in the aggregate, exceed 25 percent of its net worth;

(5) Borrow from any source, provided that the total of such funded borrowings shall at no time exceed 200 percent of its net worth. The department may, notwithstanding the other provisions of this Code section, waive the requirements of this paragraph to permit an individual credit union to borrow for authorized purposes;

(6) Undertake, with the approval of the department, other activities which are not inconsistent with this chapter or regulations adopted pursuant thereto; provided, however, that no such approval shall be granted unless the commissioner determines the activities do not present undue safety and soundness risks to the credit union involved;

(7) Organize and engage in business without having any stated amount of capital subscribed or paid in other than that derived from the subscribers' qualifying shares, commence business with only such capital authorized and paid in as may be provided in its bylaws, and provide for the payment and withdrawal thereof as and in the manner provided by its bylaws;

(8) Purchase, hold, and convey real estate for the following purposes only:

(A) Such real estate as the credit union occupies or intends to occupy primarily for the transaction of its business, subject to the prior approval of the department except to the extent authorized by regulation;

(B) Such real estate as shall be conveyed to it in satisfaction of debt previously contracted in the course of its business; and

(C) Such real estate as it shall purchase at sales under judgments, decrees, or mortgage foreclosures pursuant to mortgages or security deeds held by it;

(9) Hold real estate acquired in the cases provided for by subparagraphs (B) and (C) of paragraph (8) of this Code section and real estate which has ceased to be used primarily as credit union premises, subject to a determination by a majority vote of its directors at least once each year as to the advisability of retaining any such property and provided that no such property is held for more than five years without the prior written approval of the department;

(10) Hold property other than real estate, which is acquired in satisfaction of debts previously contracted and which a credit union is not otherwise authorized to own, for no longer than six months unless such time period is extended by the department;

(11) Dispose of property held pursuant to paragraphs (9) and (10) of this subsection through financing by the credit union without the advance of additional funds irrespective of the purchasers' membership in the credit union and of ordinarily applicable collateral margin requirements;

(12) Provide, in its articles of incorporation approved by a majority of its membership present and voting, for the elimination or limitation of personal liability of a director to the credit union or its members in their capacity as shareholders of the credit union to the same extent as a bank or trust company operating under the provisions of this chapter;

(13) Subject to any rules and regulations enacted by the department and in compliance with federal law and applicable provisions regarding insurable interests in Chapter 24 of Title 33, purchase, hold, or fund insurance on the life of any of its directors, officers, or employees, or any other person whose death might cause financial loss to the credit union, or, pursuant to any contract lawfully obligating the credit union as guarantor or surety, on the life of the principal obligor;

(14) Provide third-party payment services to its members;

(15) Provide check-cashing services, sale of payment instruments, or sale of international remittances to those consumers eligible for membership; and

(16) Enter into an agency relationship, as defined in Code Section 7-1-4, subject to restrictions and qualifications prescribed by rules and regulations of the department.

§ 7-1-651

(a) The membership of the credit union shall consist of the initial subscribers and such other persons within the field of membership as may have subscribed to one share, which has been paid by a person or the credit union, together with the required entrance fee and complied with all other requirements contained in the bylaws. No subscriber or other member shall hold more than one share out of any class of shares. The bylaws may provide for separate classes of shares for borrowers and depositors and for the par value of each share for each class, but in no event shall the par value be less than $1.00.

(b) Societies, associations, partnerships, and corporations composed of persons who are eligible for membership or headquartered within the field of membership may be admitted to membership in the same manner and under the same conditions as such persons.

(c) A person or corporation who leaves the field of membership may be permitted to retain his membership in the credit union at the discretion of the board of directors.

(d) Customers of a bank that have been acquired by a credit union as a result of a merger or purchase and where the bank will cease to exist, due to a voluntary or involuntary dissolution, shall become members of the credit union upon the effective date of the underlying transaction; provided, however, that nothing herein shall be deemed as permitting a public body to be a member of a credit union. As used in this subsection, the term “public body” shall have the same meaning as provided in Code Section 45-8-1.

§ 7-1-651.1

(a) Except as provided in subsection (c) of this Code section, the annual meeting of the members shall be held in person.

(b) Members may participate and vote remotely at the meetings of the members if the bylaws of the credit union explicitly provide an option for remote participation and voting. If the bylaws so provide, the board of directors shall:

(1) Implement reasonable measures to:

(A) Provide members a reasonable opportunity to remotely participate in such meetings. Such measures may include, but are not limited to, audio webcast or other broadcast of the meeting but, in every instance, shall provide members the ability to communicate substantially concurrently with the proceedings;

(B) Enable members to vote at such meetings by means of electronic communication. Such measures may include, but are not limited to, telephonic or internet voting; and

(C) Verify that each person deemed present and permitted to vote remotely is a member in order to ensure the integrity of the vote;

(2) Provide the option for remote participation and voting at no cost to members; and

(3) Keep a record of remote attendance by members and any vote or other action taken by a member participating remotely.

(c) In the event of a proclaimed emergency pursuant to Code Section 7-1-111, the board of directors may apply to the department for authorization to conduct a meeting of the members solely through remote participation. If such application is approved by the department, the board of directors shall comply with the requirements of subsection (b) of this Code section.

§ 7-1-652

(a) A share may be issued and deposits received jointly in the names of a member and a nonmember with right of survivorship, but no joint tenant shall be permitted to vote, obtain loans, or hold office unless he is within the field of membership and is a qualified member.

(b)(1) A minor shall be allowed to have deposits in a credit union in his own name, and the deposits made by the minor shall not be subject to the control of his parent, guardian, or trustee. A minor may have third-party payment accounts. A receipt or acquittance signed by such a minor depositor shall be a valid and sufficient release and discharge of such credit union for any payment of any deposit to such minor. In the transactions involving payments to third parties out of the minor's account, the payment of an order of the minor shall be a valid and sufficient release and discharge of the credit union for any payment of such funds from the minor's account. This subsection shall continue to include, without limitation:

(A) Deposits in such credit unions by a minor with one or more adults or other minors, as party to and with the same effect as a multiple-party account under Article 8 of this chapter;

(B) The rental to a minor by said credit unions of a safe-deposit box or other receptacle for the safe deposit of property from such minor (and the receipt of any such property), individually or jointly with one or more adults; and

(C) The dealing with a minor by said credit unions with respect to such a deposit account, third-party payment account, or safe-deposit agreement without the consent of a parent or guardian and with the same effect as though the minor were an adult.

(2) Any action of the minor with respect to such deposit account, third-party payment account, or safe-deposit agreement shall be binding on the minor with the same effect as though the minor were an adult.

(c) In addition to its regular shares, a credit union may offer to its members “preferred capital base” shares when permitted by its bylaws. Such shares may be held without limit, shall be subject to the following restrictions, and may entitle the holder to the following rights and preferences:

(1) Such shares shall have no par value;

(2) Such shares shall be redeemed only at a stated maturity of not less than one year or within ten days of such maturity;

(3) Such shares shall be transferable on the books of the credit union so long as the acquiring person is a member of the credit union;

(4) Such shares may have a preference on the payment of dividends and interest up to 2 percent over the dividend rate paid to members on regular shares and deposits or such higher rates as approved by the credit union members and the department. Any such preference shall be fixed at the time of issuance of the shares; and

(5) Such shares shall be subordinate to claims of depositors and other creditors in the event of liquidation of the credit union but shall rank ahead of the claims of regular shares.

§ 7-1-653

(a) At any regular or called meeting of the members, by a two-thirds' vote of those present, the members may expel from the credit union any member thereof. A member may withdraw from a credit union and a nonmember may withdraw deposits as provided in this Code section by filing a written notice of such intention. All deposits of an expelled or withdrawing member or nonmember with any interest accrued shall be paid to such member or nonmember, subject to 60 days' notice, after deducting any amounts due to the credit union by such member or nonmember. A credit union, upon the resignation or expulsion of a member, shall cancel the share, deposits, or dividends or interest due thereon and may apply the withdrawal value of such funds toward the liquidation of such member's indebtedness. Said expelled or withdrawing member or nonmember shall have no further right in said credit union or to any of its benefits, but such expulsion or withdrawal shall not operate to relieve said member or nonmember from any remaining liability to the credit union.

(b) A member may be expelled for reasons defined in the bylaws by a two-thirds' vote of the board of directors. An expelled member may obtain reinstatement by an affirmative vote of the majority of the members voting at the next annual meeting of the credit union.

(c)(1) In addition to the other powers set forth in this Code section, the board of directors may, by a two-thirds' vote of the directors, adopt and enforce a policy with respect to expulsion from membership based on:

(A) Nonparticipation by a member in the affairs of the credit union. Such policy shall require the board to consider a member's failure to maintain deposits, shares, or loans with the credit union;

(B) Activity inconsistent with the safe and sound operation of the credit union, which may include, but shall not be limited to:

(i) Causing a financial loss to the credit union;

(ii) Disrupting the operations of the credit union;

(iii) Committing fraud, attempted fraud, or other illegal behavior;

(iv) Engaging in inappropriate behavior; and

(v) Violating the membership agreement of the credit union.

(2) If such a policy is adopted, written notice of the policy and the effective date of such policy shall be provided to each member of the credit union not less than 30 days prior to the effective date of such policy. In addition, each new member shall be provided written notice of any such policy prior to or upon applying for membership.

§ 7-1-654

The capital of the credit union shall consist of the payments that have been made to it by the members on their qualifying shares. A credit union shall have a lien on a member's share and deposits and on dividends or interest payable thereon for and to the extent of any loan made by it to such member and of any dues and fines payable to it by such member.

§ 7-1-655

(a) At the first annual meeting, the members shall elect from among their number a board of directors of no less than five nor more than 25 and at each annual meeting thereafter shall elect successors to the members of the board of directors whose terms of office expire at such annual meeting.

(b) Except as this Code section permits the bylaws of a credit union to provide otherwise, members of the board of directors elected at the first annual meeting shall serve until the next annual meeting and until their successors are elected and qualified. A credit union may in its bylaws provide for staggered elections for members of the board of directors; but in that event the bylaws shall provide that as nearly as possible one-third of the board shall be elected at each annual meeting.

(c) At the organizational meeting and at its first meeting after each annual meeting of the members, the board of directors shall appoint an audit committee, credit committee, chairperson, secretary, and such other officers consistent with the bylaws as the board deems desirable. No member of the audit committee may be an employee of the credit union.

(d) The chairperson of the credit and audit committees shall be appointed by the board from among its number. Both the credit and audit committees shall be accountable to the board and members of such committees may be removed by the board.

(e) Officers and the committee members elected or appointed at the organizational meeting shall serve until the first annual meeting. Thereafter, the terms of such persons shall be until their successors are chosen or have duly qualified. An officer elected or appointed to fill an unexpired term shall be elected or appointed for the balance of that term.

(f) All members of the board and all officers and committee members shall be sworn to perform faithfully the duties of their several offices in accordance with this chapter and the bylaws or as otherwise lawfully established. The oaths shall be subscribed in writing and a copy thereof shall be retained in the minutes of the meetings of the board. The oaths shall not modify in any manner the legal duties of or the standard of care for members and officers in the exercise of such duties.

(g) The entire board of directors or an individual director may be removed from office without cause by the vote of a quorum of members at a properly called meeting.

(h) The board may remove a director from office if:

(1) The director is adjudicated an incompetent by a court or is convicted of a felony;

(2) The director does not, within 60 days of his or her election or such longer time as may be specified in the bylaws, accept the office in writing or by attendance at a meeting and fulfill other requirements for holding the office;

(3) The director fails to attend regular meetings of the board for six successive meetings without having been excused by the board;

(4) The director was an employee or duly elected officer of the credit union and was discharged or resigned at the request of the board for reasons relating to performance of duties as an employee or officer of the credit union; or

(5) For any reason set forth in the bylaws of the credit union.

(i) The board of directors, by a two-thirds' vote of a quorum of the board, may suspend any member of the credit union's board of directors, for cause, until the next membership meeting, which shall be held not less than seven nor more than 60 days after such suspension. The suspended person will be notified of the details of his or her suspension, and shall have the right to request a meeting with the board to reconsider his or her suspension prior to the membership meeting. Any suspended member of the board of directors may be removed by a majority vote of a quorum of members at a properly called meeting. At such meeting of the membership, the suspended person shall have the right to make a presentation to the members and the suspension shall be acted upon by the members at such meeting and the person shall be removed from, or restored to, the board.

(j) Vacancies in the board of directors, whether caused by removal or otherwise and including vacancies resulting from an increase in the number of directors, may be filled by the remaining members of the board, even though less than a quorum.

(k) The credit union shall immediately notify the department upon a change in president or chief executive officer.

§ 7-1-656

(a) The board of directors shall be responsible for the affairs, funds, and records of the credit union and shall meet as often as necessary. The board of directors shall meet at least once during ten different months of each calendar year unless an alternative schedule is approved in writing by the department, but in no event shall the board meet less frequently than once in each calendar quarter. Unless the bylaws specifically reserve any or all of the duties to the members, it shall be the special duty of the directors:

(1) To act upon all applications for membership or approve the actions of an officer without loan granting authority, designated by the board of directors to approve applications for membership;

(2) To determine from time to time rates of interest and dividends which shall be allowed on deposits and charged on loans consistent with this article and other applicable laws and to authorize any interest refunds on such classes of loans and under such conditions as the board prescribes;

(3) To fix the amount of the fidelity bond which shall be required of all officers, employees, agents, or members having custody of funds, properties, or records; provided, however, that the amount of such fidelity bond shall not be less than such minimum requirements as shall be prescribed by regulation of the department and shall be in such form as may from time to time be approved by the department;

(4) To fix within the restrictions imposed by statute the maximum amount of deposits which may be made by and the maximum amount that may be loaned to any one member;

(5) To fill vacancies on the board of directors, credit committee, and audit committee until the election and qualification of a successor;

(6) To have charge of the investment of funds of the credit union other than loans to members within the restrictions imposed by statute or delegate investment authority to a qualified committee or officer as designated by the board of directors;

(7) To appoint any committees deemed necessary; and

(8) To perform such other duties as the members may from time to time authorize.

(b) Unless otherwise provided in the articles or bylaws of a credit union:

(1) A majority of all directors shall constitute a quorum for the transaction of business and actions of a majority of those present at a meeting at which a quorum is present shall be deemed as actions of the board of directors;

(2) The board of directors may designate three or more of its number to constitute a credit committee, audit committee, or other committees which, to the extent provided in a resolution, shall have and exercise the authority of the board of directors with regard to the business of a credit union; and

(3) Any action authorized to be taken at a meeting of the board of directors or a credit, audit, or other committee may be taken without a meeting if the action is set forth in writing and approved and signed by all directors or all members of the credit, audit, or other committee entitled to vote with respect to the underlying subject matter.

(1) Receive anything of value for procuring or attempting to procure any loan from or investment by such credit union;

(2) Purchase, or directly or indirectly be interested in purchasing, from the credit union a promissory note or other evidence of indebtedness issued by the credit union for less than face value; or

(3) Purchase or sell any other asset to the credit union except:

(A) Upon terms not less than favorable to the credit union than those offered other persons or corporations; and

(B) With prior approval of the board of directors or a committee thereof authorized to act for the board, unless the transaction is made in the regular course of business.

(d) No director shall be eligible to vote concerning any purchase or sale when such director is or would be a party to the transaction.

(e) The provisions of Code Section 7-1-490 relative to the responsibilities of directors and officers and the delegation of investment decisions shall be applicable to the duties of directors, credit and audit committee members, and officers of credit unions.

(f) The board of directors may appoint an individual as an honorary director or director emeritus or member of an advisory board. An individual so appointed may be compensated but shall not vote at any meeting of the board of directors or be counted in determining a quorum and shall not have any responsibility for or be subject to any liability imposed upon a director or otherwise be deemed a director.

(g) The board of directors may determine that a meeting of such board will be held, in whole or in part, by any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by such means shall be considered to be present in person at the meeting.

§ 7-1-657

(a) The audit committee shall be responsible for securing a comprehensive audit of the credit union at least once each year unless such time period is modified pursuant to the rules and regulations of the department. Except as provided for in subsection (c) of this Code section, the committee shall employ the services of a licensed, independent certified public accountant or firm of such accountants to make such comprehensive audit. The results of the audit shall be submitted to the board, and the committee shall present a summary of the results of the audit to the membership. The committee shall make recommendations to the board for the correction of any deficiencies disclosed by the audit. The annual audit shall include a confirmation of the share, deposit, and loan accounts of the members and such other procedures as the department might require. The annual audit shall be preserved with the records of the credit union, and a copy of such audit shall be filed with the department upon request by the department.

(b) The audit committee, from time to time, may conduct or cause to be conducted other audit functions or reviews of operations or may make or cause to be made an inspection of the assets and the liabilities of the credit union. The committee shall report the results of any such reviews to the board of directors and shall be responsible for making specific recommendations to the board regarding any unsafe, unsound, or unauthorized activities discovered.

(c) Based upon the total assets of a credit union, the complexity of a credit union, or other factors, the department may enact rules and regulations authorizing certain credit unions to obtain the required comprehensive audit from an individual or entity that is not a licensed, independent certified public accountant or firm of such accountants so long as the individual or entity is independent or otherwise qualified.

§ 7-1-658

(a) Credit unions may lend money to their members at reasonable rates of interest, which shall not exceed 1 1/4 percent each month on the unpaid balance, or such greater rates as shall be authorized for other financial institutions for such purposes as may be approved by the credit committee.

(b) Loans shall be supervised as follows:

(1) The credit committee shall have the general supervision of all loans to members. The credit committee shall hold such meetings as the business of the credit union may require and not less frequently than once each quarter to consider applications for loans. Reasonable notice of such meetings shall be given to all members of the committee. Actions of the credit committee shall be reported to the board in such form as the board shall prescribe at each regular meeting of the board. No loan shall be made unless it is approved by a majority of the entire committee, except as provided in this Code section;

(2) The credit committee may appoint one or more employees to be loan officers and delegate to such persons the power to approve or disapprove loans to a borrower that do not in the aggregate exceed 5 percent of the net worth of the credit union subject to such limitations or conditions set forth in this Code section for loans generally and such further limitations and conditions as the credit committee prescribes. Records of loans approved shall be maintained in such form as the credit committee shall prescribe and shall be made available to the credit committee upon request. The credit committee may not appoint more than one of its members to be a loan officer. No person shall have the authority to disburse funds of the credit union for any loan which has been approved by such person;

(3) In lieu of a credit committee, the board of directors may appoint one or more loan officers and delegate to such persons the power to approve or disapprove loans to a borrower that do not in the aggregate exceed 5 percent of the net worth of the credit union subject to such limitations or conditions set forth in this Code section for loans generally and such further limitations and conditions as the board may prescribe. All other duties of the credit committee as described in this article shall become the duties of the board of directors. Records of loans approved shall be maintained by the loan officers in such form as the board shall prescribe and a listing of all loans made, including the name of the borrower and the amount of the loan, shall be submitted to the board at each meeting; and

(4) Members may appeal a credit decision made by a loan officer to the credit committee or to the board if denied by the credit committee. Where there is no credit committee, appeal shall be made to the board.

(c) Loans may be made to officers, directors, and committee members of the credit union under the same general terms and conditions as to other members of the credit union; provided, however, that no officer, director, committee member, or employee shall participate in approving any loan in which he or she has a direct or indirect financial interest. The approval of all loans to officers, directors, and committee members of the credit union shall be reported to the board of directors at its next meeting.

(d) As used in this Code section, the term “person” or “corporation” includes, but is not limited to, an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, or unincorporated organization.

(e) No credit union shall be authorized to make loans to any one person or corporation where the aggregate of such loans and obligations together exceeds 5 percent of the net worth of the credit union unless each loan in excess of said 5 percent limit is approved in advance by the board of directors or the credit committee subject to the provisions set forth in subsections (f) and (g) of this Code section. Approval by the board of directors or credit committee shall be recorded in the formal minutes of the actions of the board or the credit committee by name of borrower, amount of loan, maturity of loan, general type of collateral, and such other information as required pursuant to the rules and regulations of the department. Any action required by this subsection may be taken as prescribed in Code Section 7-1-656, provided that the minutes of the proceedings of the board of directors or credit committee reflect such action and each director taking such action signs the minutes reflecting such action by no later than the next regular meeting of the board or credit committee attended by such director.

(f) Except as provided in subsection (g) of this Code section, a credit union shall not directly or indirectly make loans or have obligations to any one person or corporation which in aggregate exceed 5 percent of the net worth of the credit union at the time of issuance of a binding commitment unless the entire amount of such loans and obligations is secured by good collateral or other ample security and does not exceed 25 percent of the net worth at the time of issuance of a binding commitment. Except as otherwise indicated in subsection (g) of this Code section, the purchase or discount of agreements for the payment of money or evidences of indebtedness shall be regarded as indirect loans to the person or corporation receiving the proceeds of such transactions. In estimating the legal lending limit for any one person or corporation, loans to related corporations, partnerships, and other entities shall be combined subject to regulations established by the department.

(g) The limitations of subsection (f) of this Code section shall not apply to:

(1) Obligations of and obligations guaranteed by:

(A) The United States;

(B) The State of Georgia or a public body thereof authorized to levy taxes;

(C) Any state of the United States or any public body thereof if the obligations or guarantees are general obligations; or

(D) Any agency of this state as defined in subparagraph (a)(1)(A) of Code Section 50-14-1;

(2) Obligations to the extent secured by:

(A) Obligations fully guaranteed by the United States;

(B) Guaranties or commitments or agreements to take over or purchase made by any public body of the United States or any corporation owned directly or indirectly by the United States; or

(C) Loan agreements between a local public agency or a public housing agency and an instrumentality of the United States pursuant to national housing legislation under which funds will be provided for payment of the obligations secured by such loan agreements;

(3) Obligations with respect to the sale of federal or correspondent funds to financial institutions having their deposits insured to the same extent as that required of similar institutions chartered in this state;

(4) A renewal or restructuring of a loan as a new loan or extension of credit following the exercise by the credit union of reasonable efforts, consistent with safe and sound banking practices, to bring the loan into conformance with the lending limits of this Code section, unless:

(A) New funds are advanced by the credit union to the borrower, except as permitted under this Code section;

(B) A new borrower replaces the original borrower; or

(C) The department determines that a renewal or restructuring was undertaken as a means to evade the credit union's lending limit; and

(5) Unsecured obligations below the unsecured legal lending limit in conjunction with secured obligations below the secured legal lending limit so long as the total aggregate liability for both secured and unsecured obligations is $50,000.00 or less.

(h) The department may, by regulation not inconsistent with this Code section, prescribe definitions of and requirements for transactions included in or excluded from the indebtedness to which this Code section applies. The department may, by regulation or otherwise, specify that the liabilities of a group of one or more persons or corporations or both shall be considered as owed by one person or corporation for the purposes of this Code section because the borrowers within the group are related through common control or the group meets other criteria established by the department for the combination of indebtedness for legal lending limitation purposes.

(i) Except as provided in subsection (e) of this Code section, approval of loans by the credit committee shall be evidenced, prior to disbursement of the loan proceeds, by a writing signed by a committee member stating that the committee has approved the loan. If the board appoints loan officers in lieu of a credit committee, it shall establish policies for approval of loans by those loan officers.

(j) Notwithstanding the provisions of subsections (b) and (e) of this Code section requiring prior approval by the board of directors or credit committee for all loans that in the aggregate exceed 5 percent of its net worth, the department upon request by a credit union may increase the threshold for such approval but in no event shall such threshold exceed $150,000.00.

§ 7-1-659

(a) A credit union may charge entrance fees as provided in the bylaws. All such fees shall, after payment of organizational expense, be known as reserve income and shall be added to the regular reserve of the credit union.

(b) Immediately before the payment of each dividend, the gross earnings of the credit union shall be determined. There shall be set aside from that amount, as allowances for credit losses, sums adequate to cover such anticipated losses, based on the risk characteristics of the loan portfolio.

(c) All credit unions shall be subject to the capital and reserve requirements of Part 702 of the Rules and Regulations of the National Credit Union Administration, known as Prompt Corrective Action. Credit unions that are less than ten years old shall operate according to a business plan which shall contain requirements for reserves and which shall be approved by the department. The department shall have the discretion to require additional capital and reserves to assure the safety and soundness of any credit union.

(d) In addition to regular reserves, special reserves to protect the interest of members shall be established when found necessary in any special case by the board of directors of the credit union or by the department.

(e) All reserves of credit unions or federal credit unions established in accord with generally accepted accounting principles or upon the specific direction of the department or any federal regulatory body or for the purpose of complying with any conditions lawfully imposed by the department or any federal regulatory body shall not be considered as surplus or undivided profits of any credit union for tax purposes.

§ 7-1-660

(a) As used in this Code section, the term “dividend” means a designated distribution of earnings other than the payable contracted rate of interest due to members and depositors in all deposit and share account categories.

(b) At such intervals and for such periods as the board of directors may authorize, dividends from undivided earnings may be declared at such amounts as are determined by the board, provided that such dividends shall not be paid until provision for the transfer to the allowances for credit losses has been made. Dividends in excess of specified amounts prescribed by regulations of the department to ensure that credit unions maintain an adequate capital structure shall not be paid without the prior approval of the department. In such cases, the proposed dividend or interest may be paid after approval by the department upon its determination that such payment would be in the continued best interest of the credit union, would promote its stability, and would not impair its ability to repay its creditors other than its members and depositors.

§ 7-1-661

The credit union fiscal year shall end at the close of business on December 31, unless the bylaws of the credit union specify a different fiscal year. Special meetings of the members may be held by order of the directors or on written request of 10 percent of the members. At all meetings a member shall have but one vote. No member may vote by proxy; but a society, association, partnership, or corporation having membership in the credit union may be represented by one person duly authorized by said society, association, partnership, or corporation to represent it. At any meeting the members may decide on any matter of interest to the credit union and may overrule the board of directors, provided the notice of the meeting shall have stated the question to be considered.

§ 7-1-662

Credit unions shall not be subject to any tax except the ad valorem tax upon property imposed by the Constitution of this state unless made subject thereto by express provision of the law specifically naming credit unions and making them subject thereto. All ad valorem taxes against credit unions shall be assessed upon the value of their shares, including surplus and undivided profits, and not upon their assets, other than real estate; and the rate of taxation shall not exceed the rate of taxation imposed on banking corporations, provided that, so long as federal credit unions are exempt from the payment of the tax imposed under this Code section, state credit unions shall likewise be exempt.

§ 7-1-663

Without limitation on the authority conferred by Article 1 of this chapter, the department is authorized to make such rules and regulations not inconsistent with this article and other applicable statutes governing the operation of credit unions as it may consider reasonable and proper for the protection of all funds invested. The department shall solicit comments from credit unions at least annually for recommended changes to the department's rules and regulations.

§ 7-1-664

(a) For purposes of this Code section, the term:

(1) “Automated teller machine” means electronic equipment which performs routine banking transactions, including, but not limited to, the taking of deposits for the public at locations off premises of a credit union's main or branch office under regulations prescribed by the commissioner. Such term includes electronic equipment that utilizes, or has the capability to utilize, live video chat with offsite credit union personnel capable of assisting with banking services, including, but not limited to, account initiation.

(2) “Cash dispensing machine” means an automated or electronic terminal which dispenses cash or scrip redeemable for goods and services or for cash, goods, and services; provided, however, that such terminal is not capable of initiating intrabank transactions other than those necessary and incidental to the dispensing of cash.

(3) “Extension” means a location at which banking activity may occur but which is not a branch or main office.

(4) “Night depository” means a drop box where customers can make deposits or payments outside of normal banking hours.

(5) “Point-of-sale terminal” means electronic equipment located in non-credit union business outlets to record electronically credit union transactions occurring as a result of the sale of goods or services.

(b) A credit union location shall be authorized to operate an automated teller machine, cash dispensing machine, night depository, or point-of-sale terminal without prior approval of the department; provided, however, that such extension complies with the requirements of this Code section and any rules and regulations of the department relating to notification.

(1) Any federally insured credit union may operate an automated teller machine at any location in the state;

(2) Any credit union may operate a cash dispensing machine at any location in the state;

(3) Any credit union may operate an automated teller machine or a cash dispensing machine individually or jointly with one or more credit unions;

(4) Any credit union may operate a night depository or point-of-sale terminal at any location in the state;

(5) Any credit union may operate an extension not defined in subsection (a) of this Code section, provided that such extension is located within 200 yards of the boundary lines of a single contiguous area of property owned or leased by the credit union and used as a credit union location. Prior to the operation of such extension, the credit union shall notify the department in writing; and

(6) All other extensions must be approved by the department prior to the operation of such extension.

(d) This Code section shall not apply to personal communication devices such as telephones, computer terminals, modems, and other similar devices which are not accessible to the general public but are intended for use by a single credit union member. The department may by regulation further define “automated teller machine,” “cash dispensing machine,” “night depository,” “point-of-sale terminal,” and “personal communication device” consistent with the objectives set forth in Code Section 7-1-3.

§ 7-1-665

(a) For purposes of this Code section, the term:

(1) “Branch office” means any location of a credit union other than the main office where financial services are offered to members.

(2) “Main office” means the principal location of a credit union as such location appears in the records of the department.

(b) A credit union shall indicate its principal location with the department, and if it fails to do so, the department shall choose a location of such credit union to be the main office and shall so notify such credit union.

(c) A credit union may maintain offices at locations other than its main office if the maintenance of such branch offices shall be reasonably necessary to furnish service to its membership. The establishment of branch offices shall be subject to the prior approval of the department upon application to it in such form as it may prescribe by regulation. Participation in shared branching networks does not constitute the establishment of branch offices under this Code section.

(d) The department shall exercise its discretion in its consideration of an application to establish a branch office; provided, however, that the department shall not approve an application until it has satisfactorily ascertained that a need exists and the establishment of the proposed branch office would be advantageous to members. Such determination may be made upon consideration of the following factors:

(1) Reasonable opportunity for the proposed branch office to generate a sufficient profit;

(2) The character and fitness of the board of directors and management of the credit union to command the confidence of the membership and to warrant the belief that the business of the credit union at the branch office will be honestly and efficiently conducted;

(3) The adequacy of the capital structure of the credit union, particularly in view of the anticipated business to be generated by the proposed branch office; and

(4) The overall financial condition and safety and soundness of the applicant credit union.

Where the department by rule, regulation, or written policy has provided for expedited processing of applications or for notice procedures, it may abbreviate its review of these criteria.

(e) After receipt of a complete application, the department shall have 30 days within which to approve or disapprove such application.

(f) The department may approve an application contingent upon the satisfaction of additional conditions, including the submission of information such as the date of opening and the capital outlay for the branch office. The department may revoke such contingent approval if conditions in the approval have not been satisfied or if other violations of law occur as a result of the branch office's opening or operation.

(g) If the department disapproves an application to establish a branch office, it shall notify the applicant of its disapproval and state generally in writing the unfavorable factors influencing its decision. The decision of the department is final, except that it may be subject to judicial review as provided in Code Section 7-1-90.

(h) The department may provide by regulation that a credit union which meets certain criteria may, in lieu of filing a branch application, file a written notification with the department.

(i) In the event of merger or consolidation of two or more credit unions, the resulting credit union shall indicate its main office with the department and may retain and continue to operate as branch offices any or all credit union locations of the merged institutions which had been approved by the department prior to such merger or consolidation. In the event of the purchase of substantially all of the assets of a credit union, subject to the review and approval by the department of such transaction, the purchasing credit union may retain and continue to operate as branch offices any or all credit union locations of the selling credit union which had been approved by the department prior to such purchase.

§ 7-1-666

(a) Every credit union shall be required to obtain deposit insurance satisfactory to the department before it may conduct business and accept deposits, except that credit unions which have had their deposit insurance coverage withdrawn or canceled may, in the discretion of the department, continue to accept deposits, provided that, within six months after withdrawal or cancellation of insurance, such credit unions shall obtain deposit insurance written by an insurance company authorized to transact business in this state and acceptable to the department or by the National Credit Union Administration. The department may, in its discretion, for cause shown, extend the time limitation in which deposit insurance must be obtained.

(b) Deposit insurance required to be obtained in subsection (a) of this Code section need not be in excess of amounts insured by the National Credit Union Administration at the time the insurance is obtained; but, whenever the insurance coverage is, in the opinion of the department, less than amounts insured by the National Credit Union Administration, the credit union shall be required to post a sign in boldface print, in letters at least four inches high, at a conspicuous place near the entrance of such credit union, which states “Deposits Not Insured” or “Deposits Insured Up To (insert amount of deposit insurance).” Such wording shall also follow the name of the credit union wherever it is written or printed and shall be posted in writing which is easily legible in letters at least one inch high at each window or desk receiving deposits.

§ 7-1-667

(a) A credit union may, with the approval of the department and in accordance with such uniform rules and regulations as it shall make and promulgate, be merged with another credit union under the articles of such credit union. Such merger may occur regardless of whether the credit unions serve the same field of membership, so long as there is adopted a plan agreed upon by the majority of the board of each credit union joining the merger and approved by not less than a majority of the members of the credit union being acquired present and eligible to vote at the meeting called for that purpose. The department may allow waiver of the member vote if, in its judgment, the merger is necessary to protect the safety and soundness of either or both credit unions. All property, property rights, and interests of the merging credit union shall, upon merger, be transferred to and vested in the continuing credit union without deed, endorsement, or other instrument of transfer; and the debts and obligations of the merging credit union shall be deemed to have been assumed by the continuing credit union; and thereafter the articles of the merging credit union shall be void.

(b) The provisions of Article 8 of Chapter 4 of Title 14, relating to merger and consolidation, shall no longer be applicable to credit unions.

(d) When a credit union merges with another credit union, one shall be designated as the continuing credit union by the credit unions participating in the merger. The participating credit union that is not the continuing credit union shall be designated as the merging credit union.

(e) Upon adoption of the plan of merger, the parties to the merger shall file with the department a merger application, the articles of merger, and the fees required by Code Section 7-1-862. The articles of merger shall be signed by two duly authorized officers of each party to the plan of merger under their respective seals and shall contain:

(1) The names of the parties to the plan and of the resulting continuing credit union;

(2) The street address and county of the location of each main office, registered agent, and registered office;

(3) The votes by which the plan was adopted and the time, place, and notice of each meeting conducted in connection with such adoption;

(4) The name and county of residence of each director of the resulting continuing credit union; and

(5) Any amendments of the articles of the resulting continuing credit union.

(f)(1) Upon receipt of the information set forth in subsection (e) of this Code section, the department shall conduct such investigation as it deems necessary to ascertain whether:

(A) The articles of merger and supporting information satisfy the requirements of this chapter;

(B) The plan of merger and any modification thereof adequately protects the interests of members and other creditors;

(C) The requirements for a merger under all applicable laws have been satisfied and the resulting continuing credit union would satisfy the applicable requirements of this chapter; and

(D) The merger would be consistent with adequate and sound banking practice and in the public interest on the basis of:

(i) The financial history and condition of the parties to the plan of merger;

(ii) The proposed business plan; and

(iii) The character of their management.

(2) The department shall, in its discretion, approve or disapprove a merger on the basis of its investigation and the criteria set forth in paragraph (1) of this subsection. The department shall give written notice to:

(A) The Secretary of State of its approval of a merger along with a copy of the articles of merger; and

(B) The parties to the plan of its decision and, in the event of disapproval, a statement in general of the reasons for its decision.

(g) The rights and privileges of the members of each merging credit union shall remain intact, provided that, if any person is a member of more than one of the participating credit unions, such person shall only be entitled to one set of membership rights in the continuing credit union.

(h) In the case of a merger of a Georgia state-chartered credit union with any other credit union, with the Georgia state-chartered credit union as the continuing credit union, any assets, lines of business, activities, or powers which may accrue to the continuing credit union which would not be allowed for a Georgia state-chartered credit union shall be provided for in the plan of merger. Such plan shall include the proposal for holding or disposal of such assets or the continuation or termination of such line of business, activity, or power. The department shall review the plan to determine whether, in the interest of safety and soundness and consistent with the other objectives of Code Section 7-1-3, the activity, power, asset, or line of business should be approved, denied, or phased out within a reasonable period of time to be determined by the department.

§ 7-1-668

(a) Any credit union operating in this state may convert into a federal chartered credit union, and any federal credit union may convert into a credit union organized under this chapter upon approval of the authority under whose supervision the converted credit union will operate and upon compliance with applicable federal laws as to a converted federal credit union and upon compliance with applicable state laws as to a converted credit union. In the case of a federal credit union converting to a state credit union, such converting credit union may keep its existing members at the time of conversion, but after conversion eligibility for membership in the converted credit union must comply with state law. If there are other areas of noncompliance with state law, the credit union must provide the department with a plan to bring those areas into compliance with Georgia law within a reasonable period, to be determined by the department.

(b) The procedure for obtaining such approval and effecting the conversions in the case of a credit union shall be as follows:

(1) A meeting of the board of directors, either regular or special, shall be called for the purpose of voting on converting from a federal credit union to a credit union or from a credit union to a federal credit union. A majority of the board of directors shall adopt a resolution approving the contemplated conversion;

(2) A meeting, either regular or special, of the members shall then be called for voting on the proposed conversion. Notice of said meeting shall be given in the manner prescribed in Code Section 7-1-6 and shall include a statement indicating that the proposed conversion will be considered at the meeting. Proof of giving of the notice shall be by the affidavit of the president of the credit union. A majority of the members present at this meeting shall then approve the proposed conversion; and

(3) Within ten days after such approval of the conversion, the president or vice-president and treasurer shall file a verified copy of the resolution adopted by the board of directors with the state or federal authority under whose supervision the converting credit union is to operate.

(b.1) In addition to the requirements of subsection (b) of this Code section, in the case of a federal credit union converting to a credit union:

(1) The federal credit union shall file with the department:

(A) The articles of conversion, which shall contain:

(i) Its name and the name of the resulting credit union;

(ii) The street address and county of its main office;

(iii) The name and initial registered agent and the street address where the initial registered office will be located;

(iv) The votes by which the plan of conversion was adopted and the time, place, and notice of each meeting conducted in connection with such adoption;

(v) The name and county of residence of each director of the resulting credit union;

(vi) The provisions required in articles of a new credit union by paragraphs (6), (7), and (8) of subsection (a) of Code Section 7-1-630; and

(vii) The plan of conversion;

(B) The fees required by Code Section 7-1-862;

(C) An application and information desired by the department in order to evaluate the proposed conversion, in the form specified by the department;

(D) Applicable fees established by regulation of the department to defray the expenses of its investigation of the conversion application; and

(E) A certificate from the Secretary of State showing that the proposed name of the resulting credit union has been reserved pursuant to Code Section 7-1-131;

(2) The department shall conduct such investigation as it deems necessary to ascertain whether:

(A) The articles of conversion and supporting items satisfy the requirements of this chapter;

(B) The plan adequately protects the interests of depositors, other than creditors; and

(C) The requirements for a conversion under all applicable laws have been satisfied and the resulting institution would satisfy the applicable requirements of this chapter; and

(3) Within 90 days after receipt of the articles and all of the filings required by this subsection, the department shall, in its discretion, approve or disapprove the articles on the basis of its investigation and the criteria set forth in this Code section. If the department approves the application, it shall deliver written approval with a copy of the articles attached to the Secretary of State and notify the federal credit union, and any other parties to the plan, of its action, provided that, if approval of any federal agency is required, the department may elect to not act on the application until such federal approval is given. If the department disapproves the application, it shall give written notice to the federal credit union and any other parties to the plan of its disapproval and a statement to them generally of the reasons for its decision.

(c) Upon the issuance of the certificate of conversion by the Secretary of State, in accordance with the requirements in Code Section 7-1-554, and the written approval of the department for conversions to credit unions and with the written approval of the National Credit Union Administration for conversions to federal credit unions, the converting credit union shall then become a credit union under the laws of this state or the United States, as the case may be; and thereupon all assets shall become the property of the new credit union or federal credit union, as the case may be, subject to all existing liabilities, and every person who was a member of the converting credit union shall be a member in the new credit union or federal credit union.

(d)(1) Conversions by state chartered credit unions to financial institutions other than credit unions or financial institutions other than credit unions to state chartered credit unions shall be effected by approval of the department and compliance with any other applicable law. The department may prescribe other requirements in order to protect the rights of members or the funds invested.

(2) In conversions by state chartered credit unions to financial institutions other than credit unions, procedures provided in subsection (b) of this Code section shall be followed for obtaining approval from the department and effecting such conversions, provided that two-thirds of the members voting shall be required to approve a proposed conversion.

(3) In conversions by financial institutions other than credit unions to state chartered credit unions, the department shall prescribe procedures for financial institutions to seek approval from the department to convert to a credit union. Such procedures shall include:

(A) The procedures provided in subsection (b) of this Code section;

(B) The submission of a conversion plan by the converting financial institution. A conversion plan shall include the following, where applicable:

(i) How the converting financial institution will comply with credit union membership requirements;

(ii) Plans for the divestment of its board of directors of stock options;

(iii) Plans for the divestment of capital stock;

(iv) Plans for the phase out of all impermissible investments;

(v) Plans for compliance with credit union business loan limitations; and

(vi) Any other such information as required by the department; and

(C) The converting financial institution shall perform a complete policy review to address appraisal restrictions, lending restrictions, investment restrictions, corporate structure restrictions, and power structure in order to ensure compliance with this article and regulations of the department.

(4) The department may authorize a credit union resulting from a charter conversion under this Code section to do the following:

(A) Complete any activities that the converting financial institution legally engaged in at the effective time of the charter conversion but that otherwise are not permitted for credit unions, provided that the transitional period during which such activities are carried out does not exceed five years after the effective date of the charter conversion; and

(B) Retain for the transitional period any assets that the converting financial institution legally held at the effective time of the charter conversion that otherwise may not be held by credit unions, provided that such transitional period during which such assets are retained does not exceed five years after the effective date of the charter conversion.

§ 7-1-669

(a) As used in this Code section, the term “corporate credit union” means a credit union which is organized to serve a field of membership which consists primarily of other credit unions operating pursuant to this chapter, any other state credit union law, or the Federal Credit Union Act. A corporate credit union may be organized and operated under this chapter and subject to all provisions of this chapter which are not inconsistent with this Code section.

(b) The field of membership of a corporate credit union shall include credit unions organized and operating under this chapter, any other state credit union law, or under the Federal Credit Union Act. In addition, the field of membership may include:

(1) Members of credit unions which are members of the corporate credit union;

(2) Officials and employees of any organization or association of credit unions and of the corporate credit union;

(3) Except as limited in Article 1 of this chapter, employees of the department or of the National Credit Union Administration;

(4) Organizations and associations of persons or credit unions included in the foregoing;

(5) Persons who are:

(A) Members of a credit union that has entered into voluntary or involuntary dissolution; or

(B) Indebted to a credit union which has entered into voluntary or involuntary dissolution; or

(6) Groups within a common bond which are determined by the commissioner to lack the potential membership required for approval of their own credit union.

(c) The corporate credit union may make loans to individuals who are members pursuant to paragraph (1) of subsection (b) of this Code section only upon approval of the credit committee of the member credit union of which the individual is a member and to individuals who are members pursuant to paragraph (3) of subsection (b) of this Code section only upon reporting such loan to the appropriate supervisory authority.

(d) The commissioner may, in his or her discretion, approve greater borrowings than provided in this chapter when required to enable the credit union to meet its obligations to its members and otherwise assist its members during any emergency or hardship.

(e) A corporate credit union may:

(1) Make loans to other credit unions, but loans to any one credit union shall not exceed:

(A) For unsecured loans and lines of credit, excluding pass-through and guaranteed loans from the Central Liquidity Facility and the National Credit Union Share Insurance Fund, more than 50 percent of its net worth; or

(B) For secured loans and lines of credit, excluding those secured by shares or marketable securities and member reverse repurchase transactions, more than 100 percent of its net worth.

The department may utilize definitions found in the National Credit Union Administration rules and regulations in interpreting this subsection;

(2) Make loans to other members as specified in Code Section 7-1-658;

(3) Purchase shares of and make deposits in other credit unions;

(4) Obtain or acquire the assets and liabilities of any credit union which enters into liquidation;

(5) Invest in and grant loans to associations of credit unions and to organizations chartered to provide service to credit unions; and

(6) Borrow money and accept deposits from any source.

(f) The commissioner may issue such special regulations as he or she may deem prudent or necessary to allow a corporate credit union to promote effectively the liquidity and sound financial management of its member credit unions without unduly endangering its own liquidity and sound financial condition. Such special regulations need not be applicable to all credit unions but may be applicable only to the corporate credit union. The corporate credit union shall maintain adequate allowances for credit losses in accordance with generally accepted accounting principles and such other reserves as may be required by the rules and regulations of the department.

(g) A corporate credit union shall have all the rights and powers of any other credit union organized under this chapter and the additional rights and powers specified in this Code section.

§ 7-1-671

(a) For purposes of this Code section, the term “federal power” means any banking or corporate power, right, benefit, privilege, or immunity of a federal credit union, the deposits of which are federally insured, that may be exercised by a federal credit union doing business in this state pursuant to the Federal Credit Union Act, 12 U.S.C. Section 1751, et seq.; any other federal statute; or any regulation, ruling, circular, bulletin, order, or interpretation issued by the National Credit Union Administration. Such term shall include only the provisions set forth above which were effective on January 1, 2018.

(b) Notwithstanding any other provisions of law, a credit union may exercise any federal power while a federal credit union may also exercise such power subject to the same limitations and restrictions as are applicable to federal credit unions, provided that the requirements of subsection (d) of this Code section have been satisfied. Nothing in this subsection shall be construed as authorizing a credit union incorporated or organized in this state to exercise a federal power prior to compliance with subsection (d) of this Code section.

(c) Notwithstanding any other provisions of law, to the extent the Federal Credit Union Act, 12 U.S.C. Section 1751, et seq., or any other federal law or regulation in effect on January 1, 2018, precludes or preempts or has been determined to preclude or preempt the application of any provision of law, rule, or regulation of this state as to any federal credit union doing business in this state, a credit union may also exercise such power authorized by the preclusion or preemption subject to the same limitations and restrictions as are applicable to a federal credit union, provided that the requirements of subsection (d) of this Code section have been satisfied. Nothing in this subsection shall be construed as authorizing a credit union incorporated or organized in this state to exercise a federal power prior to compliance with subsection (d) of this Code section.

(d) In furtherance of the commissioner's statutory duties to regulate, supervise, and examine, a credit union shall notify the commissioner in writing by certified or registered mail that, pursuant to subsection (b) or (c) of this Code section, it intends to exercise a federal power or to avail itself of any federal preclusion or preemption of any provision of law, rule, or regulation of this state. Such notice shall include the specific federal authorization of the activity to be utilized, the proposed action to be undertaken by the credit union, documentation indicating that the credit union satisfies the prescribed federal standards, if any, to engage in the activity, and such other information as may be required by the department. Upon receipt of such notice, the commissioner shall determine whether the exercise of any federal power or the availing of any federal preclusion or preemption, or any part thereof, by the credit union is inconsistent with the purposes of this chapter or presents undue risk to the safety and soundness of the banking system. In making such a determination, the commissioner shall consider the financial condition of the credit union, the regulatory safety and soundness ratings of the credit union, the ability of credit union management to administer and supervise the activity, and the overall impact on the safety and soundness to all other state chartered credit unions. Based on such a determination, the commissioner may object to the exercise of the federal power, in whole or in part, or to the federal preclusion or preemption of the law, rule, or regulation of this state, in whole or in part, including objecting to a level or quantity above which a credit union may be seeking to exercise a federal power or availing itself of any federal preclusion or preemption of law, rule, or regulation of this state. If the commissioner so objects, the commissioner shall deliver such objection in writing by certified or registered mail to the credit union within 45 days of receipt of the notice; provided, however, that the commissioner may extend such period of review for an additional 45 days by providing the credit union with written notice of such extension prior to the expiration of the initial notice period. If the commissioner sends such an objection, the federal power, preclusion, or preemption, or the part thereof, objected to by the commissioner shall not be exercised by the credit union pursuant to subsections (b) and (c) of this Code section. The objection by the commissioner of a credit union's intent to exercise a federal power or avail itself of any federal preclusion or preemption shall not preclude such credit union from providing notice to the department of its intent to exercise the same federal power or to avail itself of the same federal preclusion or preemption at a later date; provided, however, that the requirements of this subsection shall be applicable for any such additional notice. Further, in the event a credit union determines, after satisfying the notice provisions of this subsection, that it no longer wishes to exercise a federal power or avail itself of any federal preclusion or preemption, then such credit union shall provide written notice of such fact to the commissioner by certified or registered mail.

(e) Notwithstanding the provisions of Code Section 7-1-70, the department shall publish information stating the federal powers that are being exercised or federal preclusions or preemptions that are being utilized by each credit union. All other information related to the notices or objections provided under subsection (d) of this Code section are governed by Code Section 7-1-70.

(f) Notwithstanding any other provisions of law, a credit union may exercise any power that was granted through an order or ruling declared by the commissioner on or before January 1, 2018, pursuant to the current or former provisions of Code Section 7-1-61, 7-1-61.1, or 7-6A-12 and which has not been rescinded or withdrawn.

(g) Any federal power or activity authorized and exercised or conducted pursuant to this Code section shall be independent from, and in addition to, any other powers granted to credit unions under applicable laws of this state or rules or regulations promulgated thereunder. The express and incidental powers granted to credit unions under the Official Code of Georgia Annotated are not limited or otherwise restricted by this Code section.

(h) Nothing in this Code section shall be construed as limiting the commissioner's authority conferred by this chapter, including the powers granted under Code Sections 7-1-61 and 7-1-61.1.

(i) Nothing in this Code section shall be construed as authorizing the imposition of interest rates by a credit union in excess of those authorized by Chapter 4 of this title nor shall any provision of this Code section be construed as permitting a credit union to make loans in violation of Chapter 17 of Title 16.

§ 7-1-680

As used in this article, the term:

(1) “Acting in concert” means knowingly acting together with a common goal of jointly acquiring control of a licensee whether or not pursuant to an express agreement.

(2) “Authorized agent” means a person designated by a licensee pursuant to Code Section 7-1-683.1 to engage in money transmission.

(3) “Average daily money transmission liability” means the amount of the licensee's outstanding money transmission obligations in this state at the end of each day in a given calendar quarter ending March 31, June 30, September 30, or December 31, added together and divided by the total number of days in the quarter.

(4) “Closed-loop transaction” means a transaction where the value or credit is primarily intended to be redeemed for a limited universe of goods, intangibles, services, or other items provided by the issuer of the payment instrument, its affiliates or agents, or others involved in the transaction functionally related to the issuer or its affiliates or agents.

(5) “Commissioner” means the commissioner of banking and finance.

(6) “Control” means the direct or indirect possession of power to direct or cause the direction of the management and policies of a person or the direct or indirect possession of power to elect or appoint a majority of executive officers or other persons exercising managerial authority of a person.

(7) “Covered employee” means any employee of a licensee or an authorized agent engaged in any function related to money transmission.

(8) “Department” means the Department of Banking and Finance.

(9) “Executive officer” means the chief executive officer, president, chief financial officer, chief operating officer, each officer with responsibility involving policy-making functions for a significant aspect of a person's business, or any other individual performing similar managerial or supervisory functions with respect to any organization, whether incorporated or unincorporated.

(10) “Individual” means a natural person.

(11) “Licensee” means a person duly licensed by the department pursuant to this article.

(12) “Misrepresent” means to make a false statement of a substantive fact. Such term may also mean to engage in any conduct which leads to a false belief which is material to the transaction.

(13) “Monetary value” means a medium of exchange, whether or not redeemable in money.

(14) “Money transmission,” “transmit money,” or “transmission of money” means engaging in the business of:

(A) Receiving money or monetary value for transmission or transmitting money or monetary value within the United States or to locations abroad by any and all means, including, but not limited to:

(i) An order;

(ii) A wire;

(iii) A facsimile; and

(iv) An electronic transfer;

(B) Selling or issuing payment instruments, including the creation, issuance, or sale of a payment instrument that is redeemable in cash or monetary value; and

Such term shall not include closed-loop transactions.

(15) “Money transmitter” means a person licensed under this article to transmit money.

(16) “Multistate licensing process” means any licensing agreement entered into by and among state agencies that regulate money transmitters.

(17) “Nationwide Multistate Licensing System and Registry” means a licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of certain persons engaged in nondepository activities.

(18) “Open-loop transaction” means a transaction using a payment instrument to redeem for goods or services at any location that accepts such payment instrument.

(19) “Passive investor” means a person that:

(A) Owns, directly or indirectly, at least 10 percent but less than 25 percent interest in or voting shares of a licensee or person in control of a licensee;

(B) Does not have the power to elect a majority of the members of the board of directors of a licensee;

(C) Is not employed by and does not perform any managerial duties for the licensee or person in control of a licensee; and

(D) Does not have the power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee.

(20) “Payment instrument” means any instrument, order, or device for the payment or transmission of money or monetary value, whether or not it is a negotiable instrument under the terms of Article 3 of Title 11, relating to negotiable instruments. Such term includes, but is not limited to, checks, money orders, drafts, stored value and open-loop transactions. Such term shall not include closed-loop transactions, credit card vouchers, letters of credit, or any instrument that is redeemable by the issuer only in specific goods or services of the issuer.

(21) “Payment instrument holder” means a person that has purchased a payment instrument from a money transmitter or who has had monetary value transmitted by a money transmitter.

(22) “Payroll processing services” means receiving money for transmission pursuant to a contract with a person to deliver wages or salaries, make payment of payroll taxes to state and federal agencies, make payments relating to employee benefit plans, or make distributions of other authorized deductions from wages or salaries. Such term shall not include an employer performing payroll processing services on its own behalf or on behalf of its affiliate.

(23) “Person” means any individual, sole proprietorship, corporation, limited liability company, partnership, trust, or any other group of individuals, however organized.

(24) “Sale” and “selling” mean the passing of title from the money transmitter or the money transmitter's agent to a payment instrument holder or remitter or an agreement to transfer money or monetary value.

(25) “Signed” shall have the same meaning as provided in Code Section 11-1-201.

(26) “Stored value” means monetary value that represents a claim against the issuer evidenced by an electronic or digital record and is intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services. Such term includes, but is not limited to, prepaid access as defined by 31 C.F.R. Section 1010.100. Such term shall not include closed-loop stored value that is not sold to the public but is issued and distributed as part of a loyalty, rewards, or promotional program.

(27) “Tangible net worth” means the aggregate assets of a person, excluding all intangible assets, less liabilities, as determined in accordance with generally accepted accounting principles in the United States.

(28) “Ultimate equitable owner” means a person that:

(A) Owns, directly or indirectly, a 10 percent or more interest in a corporation or any other form of business organization;

(B) Owns, directly or indirectly, 10 percent or more of the voting shares of any corporation or any other form of business organization; or

(C) Exerts control, directly or indirectly, over a corporation or any other form of business organization, regardless of whether such person owns or controls such interest through one or more natural persons or one or more proxies, powers of attorney, nominees, corporations, associations, limited liability companies, partnerships, trusts, joint stock companies, other entities or devices, or any combination thereof.

For purposes of determining ultimate equitable ownership by an individual, the individual's interest shall be aggregated with the interest of any other immediate family member, including the individual's spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and any other individual who shares such individual's home.

(29) “Unique identifier” means a number or other identifier assigned by protocols established by the Nationwide Multistate Licensing System and Registry.

(30) “Virtual currency” means a digital representation of monetary value that does not have legal tender status as recognized by the United States government. Such term shall not include the software or protocols governing the transfer of the digital representation of monetary value; units of value that are issued in an affinity or rewards program and that cannot be redeemed for money or virtual currencies; or an affinity or rewards program tied to a credit, debit, or prepaid card that awards points for purchases or other transactions, which points can be redeemed for dollar denominated credit to a checking, credit card, or prepaid account, or for a gift card, goods, travel, or services.

§ 7-1-681

(a) Pursuant to this article, the department may license a person to engage in money transmission.

(b) No person, regardless of the location of such person, its facilities, or its agents, shall engage in money transmission in this state without having first obtained a license authorizing such activity under this article. This prohibition applies whether or not a person utilizes a branch, subsidiary, affiliate, or agent in this state. A person is deemed to be engaged in money transmission if the person advertises that service, provides that service with or without compensation, solicits to provide that service, or holds itself out as providing that service to or from this state, even if the person has no physical presence in this state.

(c) Every person that directly or indirectly controls another that violates subsection (b) of this Code section, including, but not limited to, each general partner, executive officer, joint venture, ultimate equitable owner, or director of such person, and every person occupying a similar status or performing similar functions as such person violates with and to the same extent as such person. Any person that directly or indirectly controls a person that violates subsection (b) of this Code section may avoid liability if such person sustains the burden of proof that the person did not know and, in the exercise of reasonable care, could not have known of the existence of the facts by reason of which the original violation is alleged to exist.

§ 7-1-682

The requirement for licensure set forth in this article shall not apply to:

(1) Any state or federally chartered bank, trust company, credit union, savings and loan association, savings bank, or industrial bank, provided that every such bank, trust company, credit union, savings and loan association, savings bank, or industrial bank has deposits that are federally insured;

(2) Any authorized agent of a licensee;

(3) The United States Postal Service or its agent;

(4) Any agency, division, or instrumentality of the federal government of the United States; the government of the State of Georgia or the government of any other state; or any county or municipal government in this state;

(5) Any foreign bank that establishes a federal branch pursuant to the International Banking Act, 12 U.S.C. Section 3102;

(6) A wholly owned subsidiary of a state or federally chartered bank, trust company, credit union, savings and loan association, savings bank, or industrial bank, provided that every such bank, trust company, credit union, savings and loan association, savings bank, or industrial bank has deposits that are federally insured;

(7) A registered futures commission merchant under the federal commodities laws to the extent of its operation as such a futures commission merchant;

(8) A person that provides clearance or settlement services pursuant to a registration as a clearing agency or an exemption from such registration granted under the federal securities laws to the extent of its operation as such a provider;

(9) An operator of a payment system to the extent that it provides processing, clearing, or settlement services, between or among licensees or persons exempted by this Code section, in connection with wire transfers, credit card transactions, debit card transactions, stored value transactions, automated clearing-house transfers, or similar fund transfers;

(10) A person registered as a securities broker-dealer under federal or state securities laws to the extent of its operation as such a broker-dealer;

(11) An individual employed by a licensee, an authorized agent, or any person exempted from the licensing requirements of this article when acting within the scope of employment and under the supervision of the licensee, authorized agent, or exempted person as an employee and not as an independent contractor;

(12) A person appointed as an agent of a payee to collect and process a payment from a payor to the payee for goods or services, other than money transmission itself, provided to the payor by the payee, provided that:

(A) There exists a written agreement between the payee and the agent directing the agent to collect and process payments from payors on the payee's behalf;

(B) The payee holds the agent out to the public as accepting payments for goods or services on the payee's behalf; and

(C) Payment for the goods and services is treated as received by the payee upon receipt by the agent so that the payor's obligation is extinguished and there is no risk of loss to the payor if the agent fails to remit the funds to the payee;

(13) A person that acts as an intermediary by processing payments between an entity that has directly incurred an outstanding money transmission obligation to a customer and the customer's designated recipient, provided that the entity:

(A) Is properly licensed or exempt from licensing requirements under this article;

(B) Provides a receipt, electronic record, or other written confirmation to the customer identifying the entity as the provider of money transmission in the transaction; and

(C) Bears sole responsibility to satisfy the outstanding money transmission obligation to the customer, including the obligation to make the customer whole in connection with any failure to transmit the funds to the customer's designated recipient;

(14) A bank holding company, office of an international banking corporation, or corporation organized pursuant to the Bank Service Corporation Act, 12 U.S.C. Section 1861, under the laws of a state or the United States;

(15) Electronic funds transfer of governmental benefits for a federal, state, county, or governmental agency by a contractor on behalf of the United States or a department, agency, or instrumentality thereof, or on behalf of a state or governmental subdivision, agency, or instrumentality thereof;

(16) A board of trade designated as a contract market under the federal Commodity Exchange Act, 7 U.S.C. Section 1, or a person that, in the ordinary course of business, provides clearance and settlement services for a board of trade to the extent of its operation as or for such a board; or

(17) A person expressly appointed as a third-party service provider to or agent of an entity exempt under paragraphs (1) and (14) of this Code section, solely to the extent that:

(A) Such service provider or agent is engaging in money transmission on behalf of and pursuant to a written agreement with the exempt entity that sets forth the specific functions that the service provider or agent is to perform; and

(B) The exempt entity assumes all risk of loss and all legal responsibility for satisfying the outstanding money transmission obligations owed to purchasers and holders of the outstanding money transmission obligations upon receipt of the payment instrument holder's money or monetary value by the service provider or agent.

§ 7-1-683

(a) Each applicant for a license under this article shall:

(1) Submit an application in writing, which is made under oath and in such form as the department may prescribe;

(2) Furnish to the Nationwide Multistate Licensing System and Registry the following information:

(A) The legal name and principal office address of the person applying for the license;

(B) The name, residence, and business address of each director, ultimate equitable owner, and executive officer;

(C) If the applicant has one or more branches or other locations, including, but not limited to, locations operated by an authorized agent, at or through which the applicant proposes to engage in money transmission within this state, the complete address of each such location; and

(D) The location where its initial registered office will be located in this state, if any; and

(3) Submit such other data, financial statements, and pertinent information as the department may require with respect to the applicant, its directors, trustees, officers, members, ultimate equitable owners, subsidiaries, affiliates, or agents.

(b) The application for license shall be filed together with:

(1) An investigation and supervision fee established by the department through rule or regulation which shall not be refundable but which, if the license is granted, shall satisfy the fee requirement for the first licensed year or the remaining part thereof;

(2) Items required by other provisions of this article, including, but not limited to, Code Sections 7-1-683.2 and 7-1-684; and

(3) Other information as may be required by the department.

(c) The department shall pay all fees received from licensees and applicants related to applications, licenses, and renewals to the Office of the State Treasurer; provided, however, that the department may net such fees to recover the cost of participation in the Nationwide Multistate Licensing System and Registry.

(d) The department shall enact rules and regulations regarding the time frame by which all persons must submit an original or renewal application for licensure through the Nationwide Multistate Licensing System and Registry.

§ 7-1-683.1

(a) As authorized by this Code section, a licensee may conduct its business through designated authorized agents at one or more locations in this state, so long as such locations have been included in the licensee's application and reports as required by Code Section 7-1-683 and subsection (d) of Code Section 7-1-686. The department may refuse within 30 days after application, for cause, to approve a licensee's designation of an authorized agent. In such cases the authorized agent shall have the same procedural rights as are provided in this article for the denial of an application for a license. No additional license other than that obtained by the licensee shall be required of any authorized agent of a licensee. An authorized agent of a licensee shall transmit money only at the location designated in the written notice provided to the department.

(b) Licensees desiring to conduct licensed activities through authorized agents shall enter into a written contract with the authorized agent. The contract shall authorize the agent to operate only pursuant to the terms of the contract and shall specifically designate the authorized activities that the agent may engage in on behalf of the licensee. Upon request of the department, a licensee shall provide the department with a copy of the executed written contract between the licensee and its authorized agent.

(c) Upon the department receiving written notice from the licensee designating an authorized agent, the authorized agent shall be:

(1) Required to operate in full compliance with this article, the rules and regulations promulgated under this article, and any applicable order issued by the commissioner;

(2) Required to timely remit all money legally due to the licensee in accordance with the terms of the written contract between the licensee and the authorized agent;

(3) Prohibited from utilizing subagents to carry out its responsibilities;

(4) Subject to examination and investigation by the department as set forth in this article, including, but not limited to, the requirements of Code Section 7-1-689;

(5) Subject to administrative actions, including, but not limited to, the revocation or suspension of its authorization to act as an authorized agent, a cease and desist order, and the imposition of fines; and

(6) Required to comply with applicable state and federal law.

(d) If a license is suspended, revoked, surrendered, or expired, the licensee shall, within five business days, provide documentation to the department demonstrating that the licensee has notified all applicable authorized agents whose names are on record with the department of the suspension, revocation, surrender, or expiration of the license. Upon suspension, revocation, surrender, or expiration of a license, applicable authorized agents shall immediately cease to provide money transmission in this state as an authorized agent of the licensee.

§ 7-1-683.2

(a)(1) Each applicant and licensee shall maintain, as a continuing requirement of licensure, a minimum tangible net worth, which shall be the greater of $100,000.00 or the amount calculated pursuant to the following formula:

(A) Three percent of total assets for the first $100 million;

(B) Two percent of additional assets over $100 million up to $1 billion; and

(2) The department may, pursuant to rules and regulations, establish a process for an applicant or licensee to obtain a waiver in whole or in part of the minimum tangible net worth requirement for good cause shown.

(b)(1) An applicant shall provide with its application a corporate surety bond issued by a bonding company or insurance company authorized to do business in this state and approved by the department. The bond for money transmitters shall be in the principal sum of $250,000.00.

(2) Notwithstanding paragraph (1) of this subsection, the department may require an applicant or a licensee to provide additional coverage for the adequate protection of payment instrument holders if the average daily money transmission liability of a licensee exceeds the current bond amount or the department determines that additional coverage is necessary in order to satisfy the department that the provisions of subsection (b) of Code Section 7-1-684 are fulfilled. A licensee's level of average daily money transmission liability shall be determined by the portion of the licensee's financial reports dealing with transactions originating in Georgia which shall be submitted to the department as set forth in its rules and regulations. However, under no circumstances shall the additional bond coverage required by the department exceed $2 million.

(3) The bond shall be in a form satisfactory to the department and shall run to the State of Georgia for the benefit of the department or any payment instrument holders against the licensee or its agents. The condition of the bond shall require the licensee to pay any and all moneys for the benefit of any person damaged by noncompliance of a licensee or its agent with this article, with the rules and regulations enacted pursuant to this article, or with any condition of the bond or to pay any and all moneys that may become due and owing any creditor of or claimant against the licensee arising out of the licensee's money transmission in this state, whether through its own acts or the acts of an agent. Damage payments due under the bond include moneys owed to the department for fees, fines, or penalties. In no event shall the aggregate liability of the surety exceed the principal sum of the face amount of the bond. Claimants against the licensee may bring an action directly on the surety bond.

(c)(1) Each applicant and licensee shall maintain at all times permissible investments that have a market value computed in accordance with generally accepted accounting principles applicable in the United States of not less than the aggregate amount of all of its outstanding money transmission obligations.

(2) The types of investments that are permissible shall be established by the rules and regulations of the department. The department may limit the extent to which a specific investment maintained by a licensee within a class of permissible investments may be considered a permissible investment.

(3) Permissible investments, even if commingled with other assets of the licensee, shall be held in trust for the benefit of the purchasers and holders of the licensee's outstanding money transmission obligations in the event of insolvency, the filing of a petition by or against the licensee under the United States Bankruptcy Code, the filing of a petition by or against the licensee for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization, or in the event of an action by a creditor against the licensee who is not a beneficiary of this statutory trust. No permissible investment impressed with a trust pursuant to this paragraph shall be subject to attachment, levy of execution, or sequestration by order of any court, except for a beneficiary of this statutory trust.

(4) Permissible investments held in trust pursuant to paragraph (3) of this subsection for the benefit of the purchasers and holders of the licensee's outstanding money transmission obligations are deemed held in trust for the benefit of such persons on a pro rata and equitable basis in accordance with statutes pursuant to which permissible investments are required to be held in this state, and other states, as applicable. Any statutory trust established pursuant to this Code section shall be terminated upon extinguishment of all of the licensee's outstanding money transmission obligations.

§ 7-1-683.3

(a) The department is authorized to:

(1) Participate in the Nationwide Multistate Licensing System and Registry in order to facilitate the sharing of information and standardization of the licensing and application processes for persons subject to this article;

(2) Enter into operating agreements, information sharing agreements, interstate cooperative agreements, and other contracts necessary for the department's participation in the Nationwide Multistate Licensing System and Registry;

(3) Disclose or cause to be disclosed without liability, via the Nationwide Multistate Licensing System and Registry, applicant and licensee information, including, but not limited to, violations of this article and enforcement actions, to facilitate regulatory oversight across state jurisdictional lines;

(4) Request that the Nationwide Multistate Licensing System and Registry adopt an appropriate privacy, data security, and security breach notification policy that is in full compliance with existing state and federal law; and

(5) Establish and adopt, by rule or regulation, requirements for participation by applicants and licensees in the Nationwide Multistate Licensing System and Registry upon the department's determination that each requirement is consistent with both the public interest and the purposes of this article.

(b) The department shall enact rules and regulations establishing a process whereby licensees may challenge information entered by the department on the Nationwide Multistate Licensing System and Registry.

(c) Irrespective of its participation in the Nationwide Multistate Licensing System and Registry, the department shall retain full and exclusive authority over determinations of whether to grant, renew, suspend, or revoke licenses issued under this article. Nothing in this Code section shall be construed to reduce or otherwise limit such authority.

(d) Information disclosed through the Nationwide Multistate Licensing System and Registry is deemed to be disclosed directly to the department and subject to Code Section 7-1-70. Such information shall not be disclosed to the public and shall remain privileged and confidential pursuant to Code Section 7-1-70.

§ 7-1-684

(a) As used in this Code section, the term “conviction data” means a record of a finding, verdict, or plea of guilty or plea of nolo contendere with regard to any crime, regardless of whether an appeal of the conviction has been sought.

(b) The department shall conduct an investigation of every applicant for licensure to determine the financial responsibility, experience, character, and general fitness of such applicant. The department may issue the applicant a license to transmit money if the department determines to its general satisfaction that:

(1) The applicant is financially sound and responsible and able to transmit money in an honest, fair, and efficient manner and with the confidence and trust of the community; and

(2) All conditions for licensure set forth in this article or the rules and regulations of the department have been satisfied.

(c) The department shall not issue a license or may revoke a license if it finds that the applicant, licensee, or authorized agent; any person who is a director, officer, partner, covered employee, or ultimate equitable owner of the applicant, licensee, or authorized agent; or any individual who directs the affairs of or controls or establishes policy for the applicant, licensee, or authorized agent has been convicted of a felony in any jurisdiction or of a crime which, if committed within this state, would constitute a felony under the laws of this state. For the purposes of this article, a person shall be deemed to have been convicted of a crime if such person shall have pleaded guilty or nolo contendere to a charge thereof before a court or federal magistrate or shall have been found guilty thereof by the decision or judgment of a court or federal magistrate or by the verdict of a jury, irrespective of the pronouncement of sentence or the suspension thereof and regardless of whether first offender treatment without adjudication of guilt pursuant to the charge was entered or an adjudication or sentence was otherwise withheld or not entered on that charge, unless and until such plea of guilty or such decision, judgment, or verdict shall have been set aside, reversed, or otherwise abrogated by lawful judicial process or until probation, sentence, or both probation and sentence of a first offender have been successfully completed and documented or unless the person convicted of the crime shall have received a pardon therefor from the President of the United States or the governor or other pardoning authority in the jurisdiction where the conviction occurred.

(d) The department shall be authorized to obtain conviction data with respect to any applicant, licensee, or authorized agent; any person who is a director, officer, partner, covered employee, or ultimate equitable owner of the applicant, licensee, or authorized agent; or any individual who directs the affairs of or controls or establishes policy for the applicant, licensee, or authorized agent. Criminal history record checks may be requested by the department through the Georgia Crime Information Center and the Federal Bureau of Investigation. The department shall have the authority to receive the results of such checks. In connection with an application under this article, the department may use the Nationwide Multistate Licensing System and Registry as a channeling agent for the submission of fingerprints to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information for a state, national, and international criminal history background check and the receipt of such checks by the department. Fees required for a criminal history record check by the Georgia Crime Information Center or the Federal Bureau of Investigation shall be paid by the applicant or licensee.

(e) Upon request by the department, each applicant, licensee, or authorized agent; any person who is a director, officer, partner, covered employee, or ultimate equitable owner of the applicant, licensee, or authorized agent; or any individual who directs the affairs of or controls or establishes policy for the applicant, licensee, or authorized agent shall submit to the department fingerprints, the required records search fees, and such other information as may be required. Fees for background checks that the department administers shall be submitted to the department by applicants, licensees, and authorized agents together with fingerprints, and the department is authorized to net such fees to recover any costs incurred by the department related to running the background checks. Upon receipt of fingerprints, fees, and other required information from the department, the Georgia Crime Information Center shall promptly transmit fingerprints to the Federal Bureau of Investigation for a search of bureau records and an appropriate report and promptly conduct a search of its own records and records to which it has access. The Georgia Crime Information Center shall notify the department in writing of any derogatory finding, including, but not limited to, any conviction data regarding the fingerprint records check, or if there is no such finding. All conviction data received by the department shall be used by the department for the exclusive purpose of carrying out the responsibilities of this article, shall not be a public record, shall be confidential, and shall not be disclosed to any other person or agency except to any person or agency which otherwise has a legal right to inspect such data. All such records shall be maintained by the department pursuant to laws regarding such records and the rules and regulations of the Federal Bureau of Investigation and the Georgia Crime Information Center, as applicable.

(f) Every applicant and licensee shall be authorized and required to obtain and maintain the results of criminal background checks on covered employees. Such criminal background checks shall be commercial background checks. Applicants and licensees shall be responsible for any applicable fees charged by the company performing the criminal background check. An applicant or licensee may only employ a person whose background data has been checked and has been found to be in compliance with all lawful requirements prior to the initial date of hire. This provision does not apply to directors, officers, partners, or ultimate equitable owners of applicants or licensees or to persons who direct the affairs of or control or establish policy for applicants or licensees, whose background shall have been investigated through the department before taking office, beginning employment, or securing ownership. The department shall be entitled to review the files of any applicant or licensee to determine whether the required commercial background checks have been conducted and whether all covered employees are qualified. Notwithstanding the requirement that applicants and licensees conduct such commercial background checks, the department shall retain the right to obtain conviction data on covered employees of applicants, licensees, and authorized agents pursuant to subsection (d) of this Code section.

(g) Upon request by the department, an applicant, licensee, or authorized agent shall take all steps necessary to have an international criminal history background check performed on any directors, officers, partners, covered employees, or ultimate equitable owners of applicants, licensees, or authorized agents or persons who direct the affairs of or control or establish policy for applicants, licensees, or authorized agents. The results of such international criminal history background check shall be provided to the department.

§ 7-1-684.1

Each licensee shall submit to the Nationwide Multistate Licensing System and Registry timely reports of condition, which shall be in such form and contain such information as the department and the Nationwide Multistate Licensing System and Registry may require.

§ 7-1-684.2

The unique identifier of any licensee shall be clearly labeled on all advertisements and any other documents required by rule or regulation of the department.

§ 7-1-685

Except as otherwise specifically provided in this article, all licenses issued pursuant to this article shall expire on December 31 of each year, and each application for renewal shall be made annually on or before December 1 of each year. A license may be renewed by the filing of an application substantially conforming to the requirements of Code Section 7-1-683 as specifically modified in the department's rules and regulations. No investigation fee shall be payable in connection with such renewal application. However, an annual license fee established by rule or regulation of the department to defray the cost of supervision shall be paid with each renewal application and shall not be refunded or prorated.

§ 7-1-686

(a) A license issued pursuant to this article shall be kept in the place of business of the licensee, and a copy of such license shall be displayed prominently in every physical location in this state where money transmission is conducted. If the licensee has no physical location in this state, then the licensee's unique identifier shall be clearly posted and accessible through whichever medium the licensee engages in money transmission in this state.

(b) Such license shall not be transferable or assignable.

(c) No licensee shall engage in money transmissions under any name or names other than those authorized by the department in writing.

(d) A licensee shall give written notice to the department of any new or additional locations, including, but not limited to, locations operated by an authorized agent, not reported in either its original or renewal application. The required notice shall be in such form and contain such information as required by the department.

§ 7-1-687

(a) A licensee shall give written notice to the department of any action which may be brought against it by any creditor or claimant where such action relates to the activities authorized under this article or involves a claim against the bond filed with the department under Code Section 7-1-683.2. The notice shall provide details sufficient to identify the action and shall be sent within 30 days after the commencement of any such action. The licensee shall also give written notice to the department within 30 days of the entry of any judgment entered against the licensee.

(b) The corporate surety shall, within ten days after it pays any claim to any creditor or claimant, give notice to the department by registered or certified mail of such payment with details sufficient to identify the claimant or creditor and the claim or judgment so paid. Whenever the principal sum of such bond is reduced by one or more recoveries or payments thereon, the licensee shall furnish a new or additional bond so that the total or aggregate principal sum of such bond or bonds shall equal the sum required under Code Section 7-1-683.2 or shall furnish an endorsement duly executed by the corporate surety reinstating the bond to the required principal sum thereof.

(c) A bond filed with the department for the purpose of compliance with Code Section 7-1-683.2 shall not be canceled by either the licensee or the corporate surety except upon notice to the department electronically through the Nationwide Multistate Licensing System and Registry, and such cancellation shall be effective no sooner than 30 days after receipt by the department of such notice and only with respect to any breach of condition occurring after the effective date of such cancellation.

(d) A licensee shall give written notice to the department within ten days of the following:

(1) Any knowledge or discovery of an act prohibited by Code Section 7-1-684 or 7-1-691 or subsection (a) of Code Section 7-1-692;

(2) The discharge of any employee for actual or suspected misrepresentations, dishonest acts, or fraudulent acts;

(3) Any knowledge or discovery of the discharge of a covered employee or an authorized agent for actual or suspected misrepresentations, dishonest acts, or fraudulent acts;

(4) Any knowledge or discovery of an administrative, civil, or criminal action initiated by any government entity against the licensee or an authorized agent; any director, officer, partner, or ultimate equitable owner of the licensee or authorized agent; or any individual who directs the affairs of or controls or establishes policy for the licensee or authorized agent; or

(5) The filing of a petition by or against the licensee under the United States Bankruptcy Code, 11 U.S.C. Sections 101 through 110, for bankruptcy reorganization or the filing of a petition by or against the licensee for receivership or the making of a general assignment for the benefit of its creditors.

(e) Unless prior approval of a change in executive officer is required under Code Section 7-1-688 and notwithstanding subsection (f) of Code Section 7-1-684 requiring a criminal background check prior to the initial date of hire, a licensee shall notify the department in writing of any change of executive officer in such a manner that the notice is received by the department no later than ten business days after the effective date of the change. In the event of such change, the licensee shall initiate a criminal background check no later than ten business days after the effective date of the change. If the department determines that an executive officer does not meet the requirements of subsection (b) or (c) of Code Section 7-1-684, the department may disapprove the notice of change, and the licensee shall remove the individual from the executive officer position upon receipt of the disapproval.

§ 7-1-688

(a) Except as provided in this Code section, no person or group of persons acting in concert shall become an ultimate equitable owner of any licensee through acquisition or other change in control or become an executive officer of a licensee as a result of such acquisition or other change in control unless the person or group of persons acting in concert has first received written approval for such acquisition, change in control, or designation as an executive officer from the department. In order to obtain such approval, such person or group of persons acting in concert shall:

(1) File an application with the department in such form as the department may prescribe from time to time;

(2) Provide such other information as the department may require concerning the financial responsibility, background, experience, and activities of the applicant, its directors and executive officers, if a corporation, and its members, if applicable, and of any proposed new directors, executive officers, members, or ultimate equitable owners of the licensee; and

(3) Pay such application fee as the department may prescribe.

(b) The department may prescribe additional requirements for approval of such acquisition, change in control, or designation as an executive officer as a result of such acquisition or other change in control through rules and regulations.

(c) If the application is denied, the department shall notify the applicant of the denial and the reasons for the denial.

(d) The application provisions of this Code section shall not apply to:

(1) An acquisition by a passive investor, provided that such person submits documentation to the department, in a form prescribed by the department, establishing that such person meets the criteria for a passive investor prior to such acquisition. The failure to provide acceptable documentation establishing that the person qualifies as a passive investor or to continuously satisfy the passive investor requirements shall require the filing of a change of control application;

(2) An acquisition of a licensee by a person licensed by the department under this article, provided that:

(A) The person has not had a license revoked or suspended in any jurisdiction;

(B) The person is well-managed and has received at least a satisfactory rating for compliance and supervision at its most recent examination by the department or a state agency whose money transmitter regulatory program has been accredited by the appropriate governing authority;

(C) The resulting entity or entities are projected to meet the financial condition requirements established by this article;

(D) Neither the person nor the licensee to be acquired will implement any material changes to their respective business plans as a result of the acquisition; and

(E) The person provides the department with prior notice of the acquisition and attests to the requirements provided in this paragraph in a form prescribed by the department. If the department does not approve such notice of acquisition within 30 days of the date on which the notice was determined by the department to be complete, the notice is deemed approved. If the department disapproves such notice of acquisition, the acquiring person shall be required to file a change of control application; or

(3) A change of control of a licensee under any of the following circumstances, provided that the licensee provides written notice to the department no later than ten business days after the effective date of the change:

(A) A designation of a person to act as a proxy for the sole purpose of voting at a designated meeting of the shareholders or holders of voter shares or voting interests of a licensee or person in control of a licensee;

(B) An acquisition of an interest in a licensee by a person by bequest, descent, or survivorship;

(C) An acquisition of an interest in a licensee by a person as a personal representative, custodian, guardian, conservator, or trustee, as an officer appointed by a court of competent jurisdiction, or by operation of law;

(D) An acquisition of an interest in a licensee by a person that is exempt from licensure pursuant to Code Section 7-1-682;

(E) A public offering of securities of a licensee or person in control of a licensee; or

(F) An internal reorganization of a person in control of a licensee where the person in control of the licensee remains the same.

(e) If the department determines that any person acquiring control of a licensee pursuant to subparagraph (d)(3)(A), (d)(3)(B), or (d)(3)(C) of this Code section does not meet the requirements of subsection (b) or (c) of Code Section 7-1-684, the department may require the filing of a change in control application as provided in this Code section.

§ 7-1-689

(a) Each licensee shall make, keep, and use in its business such books, accounts, and records as the department may require to enforce the provisions of this article and the rules and regulations promulgated under it. Each licensee shall preserve such books, accounts, and records for five years or such greater period of time as prescribed in the department's rules and regulations.

(b) Records required to be made, kept, and preserved pursuant to subsection (a) of this Code section may be maintained in a photographic, electronic, or other similar form.

(c) Records required to be made, kept, and preserved pursuant to subsection (a) of this Code section may be maintained at a location outside of this state so long as such records are produced to the commissioner at the department's main office within ten days of the date of a written request by the department to the licensee.

(d) The department shall investigate and examine the affairs, business, premises, and records of any licensee or authorized agent pertaining to money transmission. The department may conduct such investigations or examinations at least once every 60 months. The department may accept examination reports performed and produced by other state or federal agencies in satisfaction of this requirement unless the department determines that the examinations are not available or do not provide information necessary to fulfill the responsibilities of the department under this article.

(e) Notwithstanding subsection (d) of this Code section, the department may alter the frequency or scope of investigations or examinations through rules or regulations prescribed by the department. In addition, if the department determines that based on the records submitted to the department and past history of operations of the licensee in the state such investigations or examinations are unnecessary, then the department may waive such investigations and examinations.

(f) In addition to any other authority set forth under this article, the department shall be authorized to conduct investigations and examinations of applicants, licensees, and authorized agents as follows:

(1) The department shall have the authority to access, receive, and use any books, accounts, records, files, documents, information, or evidence, including, but not limited to:

(A) Criminal, civil, and administrative history information, including nonconviction data;

(B) Personal history and experience information, including, but not limited to, independent credit reports obtained from a consumer reporting agency described in the federal Fair Credit Reporting Act, 15 U.S.C. Section 1681a;

(C) For an individual who has resided outside of the United States, an international investigative background report prepared by a competent independent search firm, which shall include, at a minimum, comprehensive credit, criminal, employment, media, and financial services regulatory history information; and

(D) Any other documents, information, or evidence the department deems relevant to the inquiry, examination, or investigation regardless of the location, possession, control, or custody of such documents, information, or evidence;

(2) The department may review, investigate, or examine any licensee or person subject to this article as often as necessary in order to carry out the purposes of this article;

(3) Each licensee or person subject to this article shall make available to the department, upon request, any books and records relating to the transmission of money;

(4) No licensee or person subject to investigation or examination under this article shall knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, documents, files, computer records, evidence, or other information; and

(5) In order to carry out the purposes of this Code section, the department may:

(A) Enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, documents, records, information, or evidence or by utilizing standardized or uniform methods or procedures;

(B) Accept and rely on examination or investigation reports made by other government officials within or outside this state, including, but not limited to, investigations pursuant to a multistate licensing process;

(C) Accept audit reports or portions of audit reports made by an independent certified public accountant on behalf of the licensee or person subject to this article covering the same general subject matter as the audit and may incorporate the audit report in the report of examination, report of investigation, or other writing of the department; and

(D) Use, hire, contract, or employ analytical systems, methods, or software.

(g) Each licensee shall pay an examination fee as established by the rules and regulations of the department to cover the cost of an examination or investigation.

(h) The department, in its discretion, may:

(1) Make such public or private examination or investigation within or outside of this state as it deems necessary to determine whether any person has violated this article, any rule or regulation, or order issued under this article, to aid in the enforcement of this article, or to assist in the prescribing of rules and regulations pursuant to this article;

(2) Require or permit any person to file a statement in writing, under oath or otherwise, as to all the facts and circumstances concerning the matter to be investigated;

(3) Request any financial data from an applicant or licensee;

(4) Conduct an on-site examination of a licensee or authorized agent at any location of the licensee or authorized agent without prior notice to the licensee or authorized agent. The licensee shall pay all reasonably incurred costs of the examination when the department examines the operations of its authorized agent. The department is authorized to net its out-of-state travel expenses incurred as a result of an examination or investigation of a licensee or authorized agent against the payment from the licensee; and

(5) Investigate any person asserting to be exempt from licensure for the purpose of determining whether such person satisfies an exemption set forth in Code Section 7-1-682.

(i) For the purpose of conducting any examination or investigation as provided in this Code section, the department shall have the power to administer oaths, to call any party to testify under oath in the course of such examinations or investigations, to require the attendance of witnesses, to require the production of books, accounts, records, documents, and papers, and to take the depositions of witnesses; and for such purposes the department is authorized to issue a subpoena for any witness or for the production of documentary evidence. Such subpoenas may be served by certified mail or statutory overnight delivery, return receipt requested, to the addressee's business mailing address or by examiners appointed by the department or shall be directed for service to the sheriff of the county where such witness resides or is found or where the person in custody of any books, accounts, records, documents, or papers resides or is found.

(j) The department may issue and apply to enforce subpoenas in this state at the request of any government agency, department, organization, or entity regulating money transmission in another state if the activities constituting the alleged violation for which the information is sought would be a violation of this article if the alleged activities had occurred in this state.

(k) In case of refusal to obey a subpoena issued under this article to any person, a superior court of appropriate jurisdiction, upon application by the department, may issue to the person an order requiring him or her to appear before the court to show cause why he or she should not be held in contempt for refusal to obey the subpoena. Failure to obey a subpoena may be punished as contempt by the court.

(l) Examinations and investigations conducted under this article and information obtained by the department in the course of its duties under this article are confidential, except as provided in this subsection, pursuant to the provisions of Code Section 7-1-70. In addition to the exceptions set forth in subsection (b) of Code Section 7-1-70, the department is authorized to share information obtained under this article with other state and federal regulatory agencies or law enforcement authorities. In the case of such sharing, the safeguards to confidentiality already in place within such agencies or authorities shall be deemed adequate. The commissioner or an examiner specifically designated may disclose such information as is necessary to conduct a civil or administrative investigation or proceeding. Information contained in the records of the department that is not confidential and may be made available to the public either on the department's website, upon receipt by the department of a written request, or in the Nationwide Multistate Licensing System and Registry shall include:

(1) The name, business address, and telephone, facsimile, and unique identifier of a licensee;

(2) The names and titles of the principal officers;

(3) The name of the owner or owners thereof;

(4) The business address of a licensee's registered agent for service;

(5) The name, business address, telephone number, and facsimile number of all locations of a licensee;

(6) The name, business address, telephone number, and facsimile number of all authorized agents;

(7) The terms of or a copy of any bond filed by a licensee;

(8) Information concerning any violation of this article, any rule or regulation, or order issued under this article, provided that the information is derived from a final order of the department; and

(9) Imposition of an administrative fine or penalty under this article.

(m) The authority to conduct an examination or investigation as provided for in this Code section shall remain in effect whether such licensee or person acts or claims to act under any licensing or registration law of this state or claims to act without such authority.

(n) In the absence of malice, fraud, or bad faith, a person is not subject to civil liability arising out of furnishing the department with information required by this article or required by the department under the authority granted in this article. No civil cause of action of any nature shall arise against such person:

(1) For any information relating to suspected prohibited conduct furnished to or received from law enforcement officials, their agents, or employees or to or from other regulatory or licensing authorities;

(2) For any such information furnished to or received from other persons subject to the provisions of this article; or

(3) For any information furnished in complaints filed with the department.

(o) The commissioner or any employee or agent of the department shall not be subject to civil liability, and no civil cause of action of any nature shall exist against such persons arising out of the performance of activities or duties under this article or by publication of any report of activities under this Code section.

§ 7-1-690

(a) Without limiting the power conferred by Article 1 of this chapter, the department may make reasonable rules and regulations, not inconsistent with law, for the interpretation and enforcement of this article.

(b) The department is authorized to enact rules and regulations that apply solely to persons engaged in money transmission involving virtual currency. The department shall enact such rules and regulations it finds necessary to:

(1) Foster the growth of businesses engaged in money transmission involving virtual currency in Georgia and spur state economic development;

(2) Ensure the continued solvency, safety, soundness, and prudent conduct of persons engaged in money transmission involving virtual currency;

(3) Ensure fair, timely, and equitable fulfillment of the financial obligations of such persons;

(4) Protect customers of businesses engaged in money transmission involving virtual currency from financially impaired or insolvent providers of such services;

(5) Encourage high standards of honesty, transparency, fair business practices, and public responsibility;

(6) Eliminate financial fraud, other criminal abuse, and unethical conduct in the industry; and

(7) Ensure businesses engaged in money transmission involving virtual currency provide customers with timely and understandable information in order that customers may make informed decisions about virtual currency products and services.

§ 7-1-691

It shall be prohibited for any person engaged in money transmission in this state, including any person required to be licensed under this article, to:

(1) Engage in money transmission as an agent of a principal who is not exempt from the licensure requirements under Code Section 7-1-682 and has not obtained a license hereunder, and any person who does so shall be deemed to be the principal seller or issuer of the payment instrument and not merely an agent and shall be liable to the payment instrument holder or remitter as the principal seller;

(2) Receive, transmit, or handle monetary value on behalf of another or issue a payment instrument and not be exempt from licensure under Code Section 7-1-682, and any person who does so shall be liable to the payment instrument holder for the payment thereof to the same extent as a drawer of a negotiable instrument, whether or not the payment instrument is a negotiable instrument under Article 3 of Title 11;

(3) Fail to transmit money received within ten days of receiving such money, unless the agreement between the licensee and the customer instructs the licensee to forward the money at a time that is beyond ten days of the date on which the money was received for transmission;

(4) Engage in any activity that would subject a licensee to suspension or revocation of its license under this article or any activity that the department may prohibit pursuant to rule or regulation, whether or not the person has a license;

(5) Fail to honor a valid payment instrument issued by a money transmitter that has been properly presented by the payee to a third party; or

(6) Fail to issue a refund to the customer within ten days of receipt of the customer's written request for a refund of money received for transmission, unless any of the following occurs:

(A) The money has already been transmitted;

(B) Instructions have already been given committing an equivalent amount of money to the person designated by the customer within ten days of the date on which the money was received for transmission;

(C) The agreement between the licensee and the customer instructs the licensee to forward the money at a time that is beyond ten days of the date on which the money was received for transmission. If funds have not yet been forwarded in accordance with the terms of the agreement between the licensee and the customer, the licensee shall issue a refund;

(D) The refund is requested for a transaction that the licensee has not completed based on a reasonable belief that a crime or violation of law, rule, or regulation has occurred, is occurring, or may occur;

(E) The refund request does not enable the licensee to identify the customer, the customer's contact information, and the particular transaction to be refunded if the customer has multiple transactions pending;

(F) The money was received for transmission pursuant to a written agreement between the licensee and payee to process payments for goods or services provided by the payee; or

(G) The money was received for transmission subject to the Federal Remittance Rule, 12 C.F.R. Part 1005, Subpart B.

§ 7-1-692

(a) The department may suspend or revoke an original or renewal license issued pursuant to this article or rescind the authorization to act as an authorized agent of a licensee if it finds that any ground or grounds exist which would require or warrant the refusal of an application for the issuance or renewal of a license or the authorization to act as an authorized agent of a licensee if such an application or notification were then before it. The department may also deny an application, suspend or revoke an original or renewal license issued pursuant to this article, or rescind the authorization to act as an authorized agent of a licensee if it finds that the licensee or the authorized agent has:

(1) Committed any fraud, engaged in any dishonest activities, or made any misrepresentation;

(2) Violated any provisions of this article, any rule or regulation issued pursuant thereto, any order issued by the department, or any other law in the course of its dealings as a licensee or authorized agent;

(3) Made a false statement in an original or renewal application for licensure or failed to give a true reply to a question in an original or renewal application;

(4) Demonstrated incompetency or untrustworthiness to act as a licensee or authorized agent;

(5) Failed to pay, within 30 days after it becomes final, a judgment recovered in any court by a claimant or creditor in an action arising out of the licensee's business in this state of engaging in money transmission;

(6) Purposely withheld, deleted, destroyed, or altered information requested by an examiner of the department or made false statements or misrepresentations to the department;

(7) Operated in an unsafe or unsound manner; or

(8) Made a general assignment for the benefit of its creditors, suspended payment of its obligations, or is insolvent.

(b) The department shall not issue a license to an applicant, may rescind the authorization to act as an authorized agent of a licensee, and may revoke a license if such applicant, licensee, or authorized agent is subject to or employs any person subject to a final cease and desist order that has been issued within the preceding five years if such order was based on a violation of this article. Each applicant or licensee shall, before hiring a covered employee, examine the department's public records to determine that such covered employee is not subject to a cease and desist order.

(c) The department shall not issue a license to an applicant, may rescind the authorization to act as an authorized agent of a licensee, and may revoke a license if such applicant, licensee, or authorized agent is subject to or employs any person whose license issued pursuant to this article was revoked within the preceding five years. Each applicant or licensee shall, before hiring a covered employee, examine the department's public records to determine that such covered employee's license was not revoked.

(d) The department shall not issue a license to an applicant, may rescind the authorization to act as an authorized agent of a licensee, and may revoke a license if it finds that any person who is a director, officer, partner, ultimate equitable owner of the applicant, licensee, or authorized agent or any individual who directs the affairs of or controls or establishes policy for the applicant, licensee, or authorized agent has been in one or more of those roles as a licensee whose application has been denied or license revoked or suspended within five years of the date of the application.

(e) Notice of the department's intention to enter an order denying an application for a license, rescinding the authorization to act as an authorized agent of a licensee, or suspending or revoking a license shall be given to the applicant, authorized agent, or licensee in writing, sent by registered or certified mail or statutory overnight delivery addressed to the principal place of business of such applicant, authorized agent, or licensee. If a person refuses to accept service of the notice by registered or certified mail or statutory overnight delivery, the notice or order shall be served by the commissioner or the commissioner's authorized representative under any other method of lawful service, and the person shall be personally liable to the commissioner for a sum equal to the actual costs incurred to serve the notice or order. This liability shall be paid upon notice and demand by the commissioner or the commissioner's representative and shall be assessed and collected in the same manner as other fees or fines administered by the commissioner. Within 20 days of the date of the notice of intention to enter an order of denial, suspension, revocation, or rescission under this article, the applicant, authorized agent, or licensee may request in writing a hearing to contest the order. If a hearing is not requested in writing within 20 days of the date of such notice of intention, the department shall enter a final order regarding the denial, suspension, or revocation. Any final order of the department denying an application, suspending or revoking a license, or rescinding authorization to act as an authorized agent shall state the grounds upon which it is based and shall be effective on the date of issuance. A copy thereof shall be forwarded promptly by mail addressed to the principal place of business of such applicant, authorized agent, or licensee.

(f) A decision by the department denying an application for license or of an order suspending or revoking a license shall be subject to review in accordance with Chapter 13 of Title 50, the “Georgia Administrative Procedure Act.”

(g) Whenever the department initiates an administrative action against a current licensee or an applicant, the department may pursue such action to its conclusion despite the fact that a licensee may withdraw or fail to renew its license or an applicant may withdraw its application.

(h) The suspension or revocation of a license under this Code section does not alter, ameliorate, or void a licensee's duties or liabilities under any existing contract entered into by the licensee prior to such suspension or revocation.

(i) The provisions of this Code section shall not apply when an application for a license is denied or a license is suspended as provided in Code Section 7-1-693.

§ 7-1-693

(a) Where an applicant or licensee has been found to be a borrower in default under the Georgia Higher Education Loan Program as determined by the Georgia Higher Education Assistance Corporation or has been certified by any entity of the federal government for nonpayment or default or breach of a repayment or service obligation under any federal educational loan, loan repayment, or service conditional scholarship program, such action shall not be grounds for refusal of a license or suspension of a license.

(b) Where an applicant or licensee has been found not in compliance with an order for child support as provided in Code Section 19-6-28.1 or 19-11-9.3, such action shall be sufficient grounds for refusal of a license or suspension of a license. In such actions, the hearing and appeal procedures provided for in Code Section 19-6-28.1 or 19-11-9.3 shall be the only such procedures required under this article. The department shall be permitted to share, without liability, information on its applications or other forms with appropriate state agencies to assist them in recovering child support when required by law.

§ 7-1-694

(a) The department may issue an order requiring a person to cease and desist immediately from unauthorized activities whenever it shall appear to the department that:

(1) Except as provided in paragraphs (2) and (3) of this subsection, a person has violated any law of this state or any order or regulation of the department, and such cease and desist order shall be final 20 days after it is issued unless the person to whom it is issued makes a written request within such 20 day period for a hearing;

(2) A person not licensed under this article is engaging in or has engaged in activities requiring licensure under this article, which such cease and desist order shall be final 30 days from the date of issuance, and there shall be no opportunity for an administrative hearing. If the proper license or evidence of exemption is obtained within the 30 day period, the order shall be rescinded by the department; or

(3) A person licensed under this article has received a notice of bond cancellation under Code Section 7-1-687, which such cease and desist order shall be final 20 days from the date of issuance, and there shall be no opportunity for an administrative hearing. In the event the cease and desist order becomes final, the license shall expire, and if a new license is desired, the licensee shall be required to make a new application for a license and pay all applicable fees as if it had never been licensed. If the required surety bond is reinstated or replaced and such documentation is delivered to the department within the 20 day period following the date of issuance of the order, the order shall be rescinded.

(b) The cease and desist order shall be in writing, sent by registered or certified mail or statutory overnight delivery, and addressed to the person's business address and, if the person is an individual, to the individual's personal address. Any cease and desist order sent to a person at its business address and, if an individual, his or her personal address that is returned to the department as “refused” or “unclaimed” shall be deemed as received and lawfully served.

(c) Any hearing authorized under paragraph (1) of subsection (a) of this Code section shall be conducted in accordance with Chapter 13 of Title 50, the “Georgia Administrative Procedure Act.”

(d) Whenever a person shall fail to comply with the terms of a final order or decision of the department issued pursuant to this article, the department may, through the Attorney General and upon notice of three days to such person, petition the principal court for an order directing such person to obey the order of the department within the period of time as shall be fixed by the court. Upon the filing of such petition, the court shall allow a motion to show cause why it should not be granted. After a hearing upon the merits or after failure of such person to appear when ordered, the court shall grant the petition of the department upon a finding that the order of the department was properly issued.

(e) Any person who violates the terms of any final order or decision issued pursuant to this article shall be liable for a civil penalty not to exceed $1,000.00. Each day the violation continues shall constitute a separate offense. In determining the amount of penalty, the department shall take into account the appropriateness of the penalty relative to the size of the financial resources of such person, the good faith efforts of such person to comply with the order, the gravity of the violation, the history of previous violations by such person, and such other factors or circumstances as shall have contributed to the violation. The department may at its discretion compromise, modify, or refund any penalty which is subject to imposition or has been imposed pursuant to this Code section. Any person assessed as provided in this subsection shall have the right to request a hearing into the matter within ten days after notification of the assessment has been served upon the licensee involved; otherwise, such penalty shall be final except as to judicial review as provided in Code Section 7-1-90.

(f) Judicial review of any final order or decision of the department entered pursuant to this article shall be available solely in the superior court of the county of domicile of the department.

(g) In addition to any other administrative penalties authorized by this article, the department may, by rule or regulation, prescribe administrative fines for violations of this article and any rules and regulations promulgated by the department pursuant to this article.

§ 7-1-695

Every payment instrument issued in the conduct of the business regulated by this article shall be signed by the licensee or its authorized agent, and the licensee shall be liable for the payment thereof to the same extent as a drawer of a negotiable instrument, whether or not the payment instrument is a negotiable instrument under Article 3 of Title 11.

§ 7-1-696

Any person, partnership, association, or corporation and the several members, officers, directors, agents, ultimate equitable owners, and employees thereof that shall violate any of the provisions of this article shall be guilty of a misdemeanor, which shall be punishable by imprisonment for not more than one year or by a fine of not more than $500.00, or by both such fine and imprisonment.

§ 7-1-697

Nothing in this article shall limit any statutory or common law right of any person to bring any action in any court for any act involved in the transmission of money or the right of the state to punish any person for any violation of any law.

§ 7-1-698

Any person previously approved by the department as either a money transmitter licensee or a seller of payment instruments licensee who holds such license in an active status as of July 1, 2023, shall be deemed to be a money transmitter licensee as of that date and authorized to engage in all activities included within the definition of money transmission as of that date. Any license application pending as of July 1, 2023, for a seller of payment instruments license shall be deemed to be an application for a money transmitter license as of that date.

§ 7-1-700

As used in this article, the term:

(1) “Cash payment instruments” or “cashing payment instruments” means to accept a payment instrument from a person in exchange for monetary value less a fee.

(2) “Check” means any check, money order, draft, or negotiable demand instrument.

(3) “Check casher” means an individual, partnership, association, or corporation engaged in cashing payment instruments for a fee.

(5) “Commissioner” means the commissioner of banking and finance.

(6) “Control,” “controlling,” “controlled by,” and “under common control with” means the direct or indirect possession of power to direct or cause the direction of management and policies of a person.

(7) “Covered employee” means any employee of a licensee engaged in any function related to cashing payment instruments.

(8) “Department” means the Department of Banking and Finance.

(9) “Executive officer” means the chief executive officer, president, chief financial officer, chief operating officer, each vice president with responsibility involving policy-making functions for a significant aspect of a person's business, secretary, treasurer, or any other person performing similar managerial or supervisory functions with respect to any organization, whether incorporated or unincorporated.

(10) “Fee” means a service charge, benefit, or other consideration, which includes, but is not limited to, cash, the exchange of value in excess of regular retail value, mandatory purchase of goods or services by patrons, or the purchase of catalogue items or coupons or other items indicating the ability to receive goods, services, or catalogue items.

(11) “Individual” means a natural person.

(12) “Licensee” means a person, including, but not limited to, a check casher, duly licensed under this article to accept payment instruments and exchange them for monetary value for a fee.

(13) “Misrepresent” means to make a false statement of a substantive fact. The term may also mean to engage in any conduct which leads to a false belief which is material to the transaction.

(14) “Monetary value” means a medium of exchange, whether or not redeemable in money.

(15) “Nationwide Multistate Licensing System and Registry” means a licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of certain persons engaged in nondepository activities.

(16) “Open-loop transaction” means a transaction using a payment instrument with stored value to redeem for goods or services at any location that accepts such payment instrument.

(17) “Payment instrument” means any instrument, order, or device for the payment or transmission of money or monetary value, whether or not it is a negotiable instrument under the terms of Article 3 of Title 11, relating to negotiable instruments. The term includes, but is not limited to, checks, money orders, drafts, stored value cards, and open-loop transactions. The term does not include closed-loop transactions, credit card vouchers, letters of credit, or any instrument that is redeemable by the issuer only in specific goods or services of the issuer.

(18) “Person” means any individual, sole proprietorship, corporation, limited liability company, partnership, trust, or any other group of individuals, however organized.

(19) “Stored value” means monetary value that is evidenced by an electronic record.

(20) “Ultimate equitable owner” means a person that:

(A) Owns, directly or indirectly, a 10 percent or more interest in a corporation or any other form of business organization;

(B) Owns, directly or indirectly, 10 percent or more of the voting shares of any corporation or any other form of business organization; or

(21) “Unique identifier” means a number or other identifier assigned by protocols established by the Nationwide Multistate Licensing System and Registry.

§ 7-1-701

(a) Pursuant to this article, the department may license a person to cash payment instruments.

(b) No person shall cash payment instruments without first obtaining a license under this article.

(c) Every person that directly or indirectly controls another person that violates subsection (b) of this Code section, each general partner, executive officer, joint venture, ultimate equitable owner, or director of such person, and every person occupying a similar status or performing similar functions as such person violates with and to the same extent as such person. Any person who directly or indirectly controls a person who violates subsection (b) of this Code section may avoid liability if such person sustains the burden of proof that the person did not know and, in the exercise of reasonable care, could not have known of the existence of the facts by reason of which the original violation is alleged to exist.

§ 7-1-701.1

The requirement for licensure set forth in this article shall not apply to:

(1) Any state or federally chartered bank, trust company, credit union, savings and loan association, or savings bank with deposits that are federally insured;

(2) The United States Postal Service;

(3) A state or federal governmental department, agency, authority, or instrumentality and its agents;

(4) Any foreign bank that establishes a federal branch pursuant to the International Banking Act, 12 U.S.C. Section 3102;

(5) Any person who accepts a payment instrument from a person in exchange for monetary value but does not charge a fee; or

(6) An individual employed by a licensee or any person exempted from the licensing requirements of this article when acting within the scope of employment and under the supervision of the licensee or exempted person as an employee and not as an independent contractor.

§ 7-1-702

(a) Each applicant for a license under this article shall:

(1) Submit an application in writing, which is made under oath and in such form as the department may prescribe;

(2) Furnish to the Nationwide Multistate Licensing System and Registry the following information:

(A) The legal name and principal office address of the person applying for the license;

(B) The name, residence, and business address of each director, ultimate equitable owner, and executive officer;

(C) If the applicant has one or more branches or other locations at or through which the applicant proposes to cash payment instruments within this state, the complete address of each such location; and

(D) The location where the initial registered office will be located in this state; and

(b) The application for license shall be filed together with:

(1) An investigation and supervision fee established by rule or regulation which shall not be refundable but which, if the license is granted, shall satisfy the fee requirement for the first licensed year or the remaining part thereof;

(2) Items required by other provisions of this article, including but not limited to Code Section 7-1-703 and subsection (c) of Code Section 7-1-707; and

(3) Other information as may be required by the department.

§ 7-1-702.1

A mobile payment instrument cashing facility operated by a licensee shall be treated as a branch location and the operations of the facility shall be conducted in accordance with the rules and regulations of the department.

§ 7-1-702.2

(a) The department is authorized to:

(5) Establish and adopt, by rule and regulation, requirements for participation by applicants and licensees in the Nationwide Multistate Licensing System and Registry, upon the department's determination that each requirement is consistent with both the public interest and purposes of this article.

(b) The department shall enact rules and regulations establishing a process whereby licensees may challenge information entered by the department into the Nationwide Multistate Licensing System and Registry.

§ 7-1-703

(b) The department shall conduct an investigation of every applicant for licensure to determine the financial responsibility, experience, character, and general fitness of such applicant. The department may issue the applicant a license to cash payment instruments if the department determines to its general satisfaction that:

(1) The applicant is financially sound and responsible and able to cash payment instruments in an honest, fair, and efficient manner and with the confidence and trust of the community; and

(2) All conditions for licensure set forth in this article or the rules and regulations of the department have been satisfied.

(c) The department shall not issue a license or may revoke a license if it finds that the applicant or licensee; any person who is a director, officer, partner, covered employee, or ultimate equitable owner of the applicant or licensee; or any individual who directs the affairs of or controls or establishes policy for the applicant or licensee has been convicted of a felony in any jurisdiction or of a crime which, if committed within this state, would constitute a felony under the laws of this state. For the purposes of this article, a person shall be deemed to have been convicted of a crime if such person shall have pleaded guilty or nolo contendere to a charge thereof before a court or federal magistrate or shall have been found guilty thereof by the decision or judgment of a court or federal magistrate or by the verdict of a jury, irrespective of the pronouncement of sentence or the suspension thereof and regardless of whether first offender treatment without adjudication of guilt pursuant to the charge was entered or an adjudication or sentence was otherwise withheld or not entered on that charge, unless and until such plea of guilty or such decision, judgment, or verdict shall have been set aside, reversed, or otherwise abrogated by lawful judicial process or until probation, sentence, or both probation and sentence of a first offender have been successfully completed and documented or unless the person convicted of the crime shall have received a pardon therefor from the President of the United States or the governor or other pardoning authority in the jurisdiction where the conviction occurred.

(d) The department shall be authorized to obtain conviction data with respect to any applicant or licensee; any person who is a director, officer, partner, covered employee, or ultimate equitable owner of the applicant or licensee; or any individual who directs the affairs of or controls or establishes policy for the applicant or licensee. Criminal history record checks may be requested by the department through the Georgia Crime Information Center and the Federal Bureau of Investigation. The department shall have the authority to receive the results of such checks. In connection with an application under this article, the department may use the Nationwide Multistate Licensing System and Registry as a channeling agent for the submission of fingerprints to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information for a state, national, and international criminal history background check and the receipt of such checks by the department. Fees required for a criminal history record check by the Georgia Crime Information Center or the Federal Bureau of Investigation shall be paid by the applicant or licensee.

(e) Upon request by the department, each applicant; licensee; any person who is a director, officer, partner, covered employee, or ultimate equitable owner of the applicant or licensee; or any individual who directs the affairs of or controls or establishes policy for the applicant or licensee shall submit to the department fingerprints, the required records search fees, and such other information as may be required. Fees for background checks that the department administers shall be submitted to the department by applicants or licensees together with fingerprints, and the department is authorized to net such fees to recover any costs incurred by the department related to running the background checks. Upon receipt of fingerprints, fees, and other required information from the department, the Georgia Crime Information Center shall promptly transmit fingerprints to the Federal Bureau of Investigation for a search of bureau records and an appropriate report and shall promptly conduct a search of its own records and records to which it has access. The Georgia Crime Information Center shall notify the department in writing of any derogatory finding, including, but not limited to, any conviction data regarding the fingerprint records check, or if there is no such finding. All conviction data received by the department shall be used by the department for the exclusive purpose of carrying out the responsibilities of this article, shall not be a public record, shall be confidential, and shall not be disclosed to any other person or agency except to any person or agency which otherwise has a legal right to inspect such data. All such records shall be maintained by the department pursuant to laws regarding such records and the rules and regulations of the Federal Bureau of Investigation and the Georgia Crime Information Center, as applicable.

(f) Every applicant and licensee shall be authorized and required to obtain and maintain the results of criminal background checks on covered employees. Such criminal background checks shall be commercial background checks. Applicants and licensees shall be responsible for any applicable fees charged by the company performing the criminal background checks. An applicant or licensee may only employ a person whose background data has been checked and has been found to be in compliance with all lawful requirements prior to the initial date of hire. This provision does not apply to directors, officers, partners, or ultimate equitable owners of applicants or licensees or to persons who direct the affairs of or control or establish policy for applicants or licensees, whose background shall have been investigated through the department before taking office, beginning employment, or securing ownership. The department shall be entitled to review the files of any applicant or licensee to determine whether the required commercial background checks have been conducted and whether all covered employees are qualified. Notwithstanding the requirement that applicants and licensees conduct such commercial background checks, the department shall retain the right to obtain conviction data on covered employees of applicants and licensees pursuant to subsection (d) of this Code section.

§ 7-1-703.1

Each licensee shall submit to the Nationwide Multistate Licensing System and Registry timely reports of condition, which shall be in such form and shall contain such information as the department and the Nationwide Multistate Licensing System and Registry may require.

§ 7-1-703.2

The unique identifier of any licensee shall be clearly labeled on all advertisements and any other documents required by rule or regulation of the department.

§ 7-1-704

Except as otherwise specifically provided in this article, all licenses issued pursuant to this article shall expire on December 31 of each year, and each application for renewal shall be made annually on or before December 1 of each year. A license may be renewed by the filing of an application substantially conforming to the requirements of Code Section 7-1-702 and the department's rules and regulations. No investigation fee shall be payable in connection with such renewal application. However, an annual license fee established by rule or regulation of the department to defray the cost of supervision shall be paid with each renewal application and shall not be refunded or prorated.

§ 7-1-704.1

(a) A license issued pursuant to this article shall be kept conspicuously posted in the place of business of the licensee.

(b) Such license shall not be transferable or assignable.

(c) No licensee shall cash payment instruments under any name or names other than those authorized by the department in writing.

(d) A licensee shall give written notice to the department prior to the operation of any new or additional locations not reported in either its original or renewal application which notice shall be in such form and contain such information as required by the department.

§ 7-1-705

(a) A licensee shall give written notice to the department of any action which may be brought against it by any creditor or claimant where such action relates to activities authorized under this article or involves a claim against the bond filed with the department under subsection (c) of Code Section 7-1-707. The notice shall provide details sufficient to identify the action and shall be sent within 30 days after the commencement of any such action. The licensee shall also give written notice to the department within 30 days of the entry of any judgment against the licensee.

(b) A licensee shall give written notice to the department within ten days of the following:

(1) Any knowledge or discovery of an act prohibited by Code Section 7-1-703 or 7-1-707 or subsection (a) of Code Section 7-1-708;

(2) The discharge of any employee for actual or suspected misrepresentations, dishonest acts, or fraudulent acts; or

(3) Any knowledge or discovery of an administrative, civil, or criminal action initiated by any government entity against the licensee or any of the licensee's directors, officers, partners, ultimate equitable owners, or any individual who directs the affairs of or controls or establishes policy for the licensee.

(c) Unless prior approval of a change in executive officer is required under Code Section 7-1-705.1 and notwithstanding subsection (f) of Code Section 7-1-703 requiring a criminal background check prior to the initial date of hire, a licensee shall notify the department in writing of any change of executive officer in such a manner that the notice is received by the department no later than ten business days after the effective date of the change. In the event of such change, the licensee shall initiate a criminal background check no later than ten business days after the effective date of the change.

§ 7-1-705.1

(a) Except as provided in this Code section, no person shall become an ultimate equitable owner of any licensee through acquisition or other change in control or become an executive officer of a licensee as a result of such acquisition or other change in control unless the person has first received written approval for such acquisition, change in control, or designation as an executive officer from the department. In order to obtain such approval, such person shall:

(1) File an application with the department in such form as the department may prescribe from time to time;

(3) Pay such application fee as the department may prescribe.

(c) If the application is denied, the department shall notify the applicant of the denial and the reasons for the denial.

§ 7-1-706

(b) Records required to be made, kept, and preserved pursuant to subsection (a) of this Code section may be maintained in a photographic, electronic, or other similar form.

(d) The department shall investigate and examine the affairs, business, premises, and records of any licensee pertaining to cashing payment instruments. The department may conduct such investigations or examinations at least once every 60 months. The department may accept examination reports performed and produced by other state or federal agencies in satisfaction of this requirement unless the department determines that the examinations are not available or do not provide information necessary to fulfill the responsibilities of the department under this article.

(f) In addition to any other authority set forth under this article, the department shall be authorized to conduct investigations and examinations of applicants and licensees as follows:

(1) The department shall have the authority to access, receive, and use any books, accounts, records, files, documents, information, or evidence, including, but not limited to:

(A) Criminal, civil, and administrative history information, including nonconviction data;

(C) Any other documents, information, or evidence the department deems relevant to the inquiry, examination, or investigation regardless of the location, possession, control, or custody of such documents, information, or evidence;

(2) The department may review, investigate, or examine any licensee or person subject to this article as often as necessary in order to carry out the purposes of this article;

(3) Each licensee or person subject to this article shall make available to the department, upon request, any books and records relating to the activities of cashing payment instruments;

(5) In order to carry out the purposes of this Code section, the department may:

(B) Accept and rely on examination or investigation reports made by other government officials within or outside this state; and

(g) Each licensee shall pay an examination fee as established by the rules and regulations of the department to cover the cost of an examination or investigation.

(h) The department, in its discretion, may:

(2) Require or permit any person to file a statement in writing, under oath or otherwise, as to all the facts and circumstances concerning the matter to be investigated;

(3) Request any financial data from an applicant or licensee; and

(4) Conduct an on-site examination of a licensee at any location of the licensee without prior notice to the licensee.

(j) The department may issue and apply to enforce subpoenas in this state at the request of any government agency, department, organization, or entity regulating cashing payment instruments in another state if the activities constituting the alleged violation for which the information is sought would be a violation of this article if the alleged activities had occurred in this state.

(1) The name, business address, and telephone, facsimile, and unique identifier of a licensee;

(2) The names and titles of the principal officers;

(3) The name of the owner or owners thereof;

(4) The business address of a licensee's registered agent for service;

(5) The name, business address, telephone number, and facsimile number of all locations of a licensee;

(6) The terms of or a copy of any bond filed by a licensee;

(7) Information concerning any violation of this article, any rule or regulation, or order issued under this article, provided that the information is derived from a final order of the department; and

(8) Imposition of an administrative fine or penalty under this article.

(2) For any such information furnished to or received from other persons subject to the provisions of this article; or

(3) For any information furnished in complaints filed with the department.

§ 7-1-706.1

Without limiting the power conferred by Article 1 of this chapter, the department may make reasonable rules and regulations, not inconsistent with law, for the interpretation and enforcement of this article.

§ 7-1-707

(a) No licensee shall deposit with any financial institution a payment instrument it has accepted and exchanged for monetary value unless such payment instrument is endorsed by the licensee.

(b) No licensee shall receive any payment instrument with payment deferred pending collection. Payment shall be made immediately in cash for every payment instrument accepted by the licensee and exchanged for monetary value for a fee.

(c) Notwithstanding the provisions of subsection (b) of this Code section, checks may be accepted for collection with payment deferred where the licensee has posted a surety bond in the same manner as prescribed for licensed money transmitters under Code Section 7-1-683.2 and under the same conditions as set forth under Code Section 7-1-687. The surety bond shall be in the aggregate amount of $10,000.00 for each location operated by the licensee, if the licensee operates three or fewer locations, plus $5,000.00 per location for the fourth and fifth locations operated by the licensee, plus $1,000.00 for each location operated by the licensee in excess of the fifth location. The bond shall be in a form satisfactory to the department and shall run to the State of Georgia for the benefit of any claimant against the licensee arising out of the licensee's business of cashing payment instruments with payment deferred in this state. The bond shall not be canceled by either the licensee or the corporate surety except upon notice to the department by registered or certified mail, statutory overnight delivery with return receipt requested, or electronically through the Nationwide Multistate Licensing System and Registry, and such cancellation shall be effective no sooner than 30 days after receipt by the department of such notice. In no event shall payment of a check be deferred past the time the licensee has collected on the check. Upon collection, payment shall be made immediately to the party from whom the licensee accepted the check.

(d) No licensee shall cash payment instruments made payable to a payee other than an individual unless such licensee has previously obtained appropriate documentation from the authorized executive officer of such payee clearly indicating the authority of the individual to cash the payment instrument on behalf of the payee.

(e) No licensee shall cash payment instruments without identification of the bearer of such instrument, and any person seeking to cash payment instruments shall be required to submit such reasonable identification as shall be prescribed by the department; provided, however, that the provisions of this subsection shall not prohibit a licensee from cashing payment instruments simultaneously with the verification and establishment of the identity of the presenter by means other than the presentation of identification.

(f) No licensee shall:

(1) Charge a fee for cashing payment instruments in excess of 5 percent of the face amount of the payment instrument or $5.00, whichever is greater;

(2) Charge a fee for cashing payment instruments in excess of 3 percent of the face amount of the payment instrument or $5.00, whichever is greater, if such payment instrument is state public assistance or a federal social security benefit made payable to the bearer of such payment instrument; or

(3) Charge a fee for cashing payment instruments in excess of 10 percent of the face amount of the payment instrument or $5.00, whichever is greater, if such payment instrument is a personal check or money order. For purposes of this subsection, “personal check or money order” means a payment instrument drawn against the account of an individual.

(g) No licensee shall engage in any activity that would subject the licensee to suspension or revocation of its license pursuant to this article or any activity that the department may prohibit by rule or regulation.

§ 7-1-707.1

In every location operated by a licensee, there shall be conspicuously posted and at all times displayed a notice stating the charges for cashing payment instruments.

§ 7-1-708

(a) The department may suspend or revoke an original or renewal license issued pursuant to this article if it finds that any ground or grounds exist which would require or warrant the refusal of an application for the issuance or renewal of a license if such an application were then before it. The department may also deny an application or suspend or revoke an original or renewal license issued pursuant to this article if it finds that the licensee has:

(1) Committed any fraud, engaged in any dishonest activities, or made any misrepresentation;

(2) Violated any provisions of this article, any rule or regulation issued pursuant thereto, any order issued by the department, or any other law in the course of its dealings as a licensee;

(3) Made a false statement in an original or renewal application for licensure or failed to give a true reply to a question in an original or renewal application;

(4) Demonstrated incompetency or untrustworthiness to act as a licensee;

(5) Failed to pay, within 30 days after it becomes final, a judgment recovered in any court by a claimant or creditor in an action arising out of the licensee's business of cashing payment instruments;

(6) Purposely withheld, deleted, destroyed, or altered information requested by an examiner of the department or made false statements or misrepresentations to the department; or

(7) Operated in an unsafe or unsound manner.

(b) The department shall not issue a license to an applicant and may revoke a license if such applicant or licensee is subject to or employs any person subject to a final cease and desist order that has been issued within the preceding five years if such order was based on a violation of this article. Each applicant or licensee shall, before hiring a covered employee, examine the department's public records to determine that such covered employee is not subject to a cease and desist order.

(c) The department shall not issue a license to an applicant and may revoke a license if such applicant or licensee is subject to or employs any person whose license issued pursuant to this article was revoked within the preceding five years. Each applicant or licensee shall, before hiring a covered employee, examine the department's public records to determine that such covered employee's license was not revoked.

(d) The department shall not issue a license to an applicant and may revoke a license if it finds that any person who is a director, officer, partner, ultimate equitable owner of the applicant or licensee or any individual who directs the affairs of or controls or establishes policy for the applicant or licensee has been in one or more of those roles as a licensee whose application has been denied or license revoked or suspended within five years of the date of the application.

(e) Notice of the department's intention to enter an order denying an application for a license or suspending or revoking a license shall be given to the applicant or licensee in writing, sent by registered or certified mail or statutory overnight delivery addressed to the principal place of business of such applicant or licensee. If a person refuses to accept service of the notice by registered or certified mail or statutory overnight delivery, the notice or order shall be served by the commissioner or the commissioner's authorized representative under any other method of lawful service, and the person shall be personally liable to the commissioner for a sum equal to the actual costs incurred to serve the notice or order. This liability shall be paid upon notice and demand by the commissioner or the commissioner's representative and shall be assessed and collected in the same manner as other fees or fines administered by the commissioner. Within 20 days of the date of the notice of intention to enter an order of denial, suspension, or revocation under this article, the applicant or licensee may request in writing a hearing to contest the order. If a hearing is not requested in writing within 20 days of the date of such notice of intention, the department shall enter a final order regarding the denial, suspension, or revocation. Any final order of the department denying, suspending, or revoking a license shall state the grounds upon which it is based and shall be effective on the date of issuance. A copy thereof shall be forwarded promptly by mail addressed to the principal place of business of such applicant or licensee.

(i) The provisions of this Code section shall not apply when an application for a license is denied or a license is suspended as provided in Code Section 7-1-708.1.

§ 7-1-708.1

(b) Where an applicant or licensee has been found not in compliance with an order for child support as provided in Code Section 19-6-28.1 or 19-11-9.3, such action shall be sufficient grounds for denial of an application or suspension of a license. In such actions, the hearing and appeal procedures provided for in Code Section 19-6-28.1 or 19-11-9.3 shall be the only such procedures required under this article. The department shall be permitted to share, without liability, information on its applications or other forms with appropriate state agencies to assist them in recovering child support.

§ 7-1-708.2

(a) The department may issue an order requiring a person to cease and desist immediately from unauthorized activities whenever it shall appear to the department that:

(1) Except as provided in paragraph (2) of this subsection, a person has violated any law of this state or any order or regulation of the department, and such cease and desist order shall be final 20 days after it is issued unless the person to whom it is issued makes a written request within such 20 day period for a hearing; or

(b) The cease and desist order shall be in writing, sent by registered or certified mail or statutory overnight delivery and addressed to the person's business address and, if the person is an individual, to the individual's personal address. Any cease and desist order sent to a person at its business address and, if an individual, his or her personal address that is returned to the department as “refused” or “unclaimed” shall be deemed as received and lawfully served.

(c) Any hearing authorized under paragraph (1) of subsection (a) of this Code section shall be conducted in accordance with Chapter 13 of Title 50, the “Georgia Administrative Procedure Act.”

(f) Judicial review of any final order or decision of the department entered pursuant to this article shall be available solely in the superior court of the county of domicile of the department.

§ 7-1-709

§ 7-1-709.1

Nothing in this article shall limit any statutory or common law right of any person to bring any action in any court for any act involved in cashing payment instruments or the right of the state to punish any person for any violation of any law.

§ 7-1-709.2

Every license in force and effect under the former provisions of this article, relating to cashing checks, drafts, or money orders for consideration, on July 1, 2014, shall remain in full force and effect on July 1, 2014, and all such existing licensees shall be required to renew their licenses pursuant to Code Section 7-1-704.

§ 7-1-730

This article shall be known as the “Domestic International Banking Facility Act.”

§ 7-1-731

As used in this article, the term “domestic international banking facility” means the location within this state of any banking office, other than a foreign bank branch or foreign bank agency as defined in Code Section 7-1-1100, which derives its funds (1) from sources outside of the United States, (2) from another domestic international banking facility, or (3) from temporary advances from its parent organization and employs those funds for banking purposes outside of the United States or through its parent organization, but does not accept deposits subject to check or draft. A domestic international banking facility, when properly established pursuant to this article, shall not be considered to be a “branch office” or “main office” as defined in Code Section 7-1-600.

§ 7-1-732

(a) Any bank, whether domiciled within this state or elsewhere and having total capital funds of $25 million or more, as reported to its chartering authority as of December 31 of each year, may establish and operate a domestic international banking facility in this state upon compliance with this article. Any bank having total capital funds of $25 million or less may establish such facility upon compliance with this article and upon further obtaining the approval of the department. The department shall grant such approval only after it has satisfied itself that the registrant is financially sound, is operating in substantial conformity with all applicable laws and regulations, and is, along with its principals, of good character and reputation.

(b) Prior to establishing a domestic international banking facility and annually thereafter for so long as the facility shall continue in this state, the bank shall register with the department on such forms as the department shall prescribe and pay a registration fee as determined by the department. Such registration shall include:

(1) The name and main office address of the registrant;

(2) The address at which the facility is to be located;

(3) The names of the individuals responsible for administering the business affairs of the facility in this state;

(4) The name and address of the chartering authority for the registrant;

(5) A resolution from the board of directors or other governing body of the registrant authorizing the establishment of the facility;

(6) A statement of the registrant that it has the legal capacity under the laws pursuant to which it is organized to establish the facility and that its chartering authority (and regulatory authority if different) interposes no objection to the establishment of such facility; and

(7) Such other information as the department may require.

Information required in paragraphs (5) and (6) of this subsection need not be resubmitted upon renewal of a registration. The facility shall promptly notify the department of any change in the management or location of the facility.

(c) The domestic international banking facility shall maintain records of its business activities separate from records of the domestic banking activities of its parent or head office.

(d) The domestic international banking facility shall not be subject to any tax or license fee in this state by virtue of its business location in this state or its business activities outside of this state.

§ 7-1-733

(a) The department may revoke any registration or reject any application to register or renew a registration for a domestic international banking facility upon a finding that:

(1) The facility no longer qualifies to register under this article;

(2) The scope of the business conducted by the facility exceeds that authorized by this article;

(3) The chartering authority of the parent bank of the facility requests such action in writing; or

(4) The department determines, on its own initiative or otherwise, that representations made by the registrant, including, but not limited to, representations under paragraph (6) of subsection (b) of Code Section 7-1-732, are inaccurate.

(b) No facility whose registration has been rejected by the department may establish an international banking facility in this state.

§ 7-1-734

(a) The department may examine the operations of any domestic international banking facility for the purpose of determining that the scope of its activities does not exceed that allowed pursuant to this article and that the facility is otherwise operating in compliance with the applicable laws of this state. The department may by regulation establish minimum requirements for the maintenance of books and records in sufficient form to enable the department to carry out its responsibilities under this Code section.

(b) The department may enter into cooperative and reciprocal agreements with the bank regulatory authority of any government for the periodic examination of banking offices and facilities of any kind, including domestic international banking facilities, located within this state and may accept records from such authorities in lieu of conducting its own examination for compliance with laws of this state.

§ 7-1-740

As used in this article, the term:

(1) “Board of directors” means any board of directors of a corporation created under this article.

(2) “Corporation” means a Georgia business development corporation created under this article or existing on April 1, 1975, pursuant to the former “Georgia Business Development Corporation Act of 1972,” approved April 3, 1972 (Ga. L. 1972, p. 798).

(3) “Lending institution” means any bank or trust company, savings and loan association, insurance company or related corporation, partnership, foundation, pension fund, or other institution engaged primarily in lending or investing funds.

(4) “Loan limit” means, for any member, the maximum amount permitted to be outstanding at any one time on member loans made by such member to the corporation, as determined under this article.

(5) “Member” means any lending institution authorized to do business in this state which shall undertake to make member loans to a corporation created under this article, upon its call, and in accordance with this article.

(6) “Member loan” means a loan made by a member upon the call of the corporation pursuant to Code Section 7-1-747.

§ 7-1-741

(a) Five or more persons competent to contract, a majority of whom shall be residents of this state, who may desire to create a business development corporation under this article, for the purpose of promoting, developing, and advancing the prosperity and economic welfare of the State of Georgia and, to that end, to exercise the powers and privileges provided in this article, may be incorporated by presenting articles to the Secretary of State, as provided in this Code section and Code Section 7-1-742. The articles shall contain:

(1) The name of the corporation, which shall include the words “Business Development Corporation of Georgia,” and a recitation that the corporation is organized under this article;

(2) The location of its initial registered office, but such corporation may have branch offices in such other places within the state as may be fixed by the board of directors;

(3) The purposes for which the corporation is founded, which shall include: to promote, stimulate, develop, and advance the business prosperity and economic welfare of the State of Georgia and its citizens; to encourage and assist, through loans, investments, or other business transactions, in the location of the business and industry in this state and to rehabilitate and assist existing business and industry; to stimulate and assist in the expansion of all kinds of business activity which will tend to promote the business development and maintain the economic stability of this state; to provide maximum opportunities for employment, encourage thrift, and improve the standard of living of the citizens of this state; similarly to cooperate and act in conjunction with other organizations, public or private, in the promotion and advancement of industrial, commercial, agricultural, and recreational developments in this state; and to provide financing for the promotion, development, and conduct of all kinds of business activity in this state;

(4) The names and post office addresses of the members of the first board of directors, who, unless otherwise provided by the articles or the bylaws, shall hold office for the first year of existence of the corporation or until their successors are elected and have qualified;

(5) Any provisions which the incorporators may choose to insert for the regulation of the business and for the conduct of the affairs of the corporation and any provision creating, dividing, limiting, and regulating the powers of the corporation, the directors, shareholders, or any class of the shareholders, including, but not limited to, a list of the officers, and provisions governing the issuance of stock certificates to replace lost or destroyed certificates, provided that no provision shall be contained for cumulative voting for directors; and

(6) The amount and number of authorized shares, the par value of each share, and the minimum amount of capital with which it shall do business and, if there is more than one class of stock, a description of the different classes, the names and post office addresses of the subscribers of stock, and the number of shares subscribed by each. The aggregate of the subscription shall be the minimum amount of capital with which the corporation shall commence business, which shall not be less than $100,000.00.

The articles may also contain any provisions consistent with the laws of this state for the regulation of the affairs of the corporation.

(b) The articles shall be in writing, subscribed by the incorporators, and acknowledged by each of them before an officer authorized to take acknowledgments. A copy of the articles so subscribed and acknowledged shall be filed with the department for approval.

§ 7-1-742

The department shall not approve the articles until at least 15 lending institutions authorized to do business in this state have agreed in writing to become members of said corporation; and said written agreement shall be filed with the department with the articles, and the filing of same shall be a condition precedent to the approval of the articles by the department. Whenever the articles shall have been filed in the office of the Secretary of State and approved by the department and all filing fees and taxes prescribed by law have been paid, the subscribers, their successors, and assigns shall constitute a corporation. Said corporation shall not be authorized to commence business until its articles are approved by the department. Upon such approval by the department, authorized stock of the corporation may thereafter be issued.

§ 7-1-743

(a) Upon receipt of an application for approval of articles from a corporation organized pursuant to this article, the department shall exercise its discretion in its consideration of the application; but the department shall not approve the application until it has ascertained to its satisfaction:

(1) That the public need and advantage will be promoted by the establishment of the corporation;

(2) That conditions in the locality in which the corporation will transact business afford reasonable promise of a successful operation;

(3) That the applicants may legally invest in the stock of the corporation and that such investment would not be to the detriment of the applicants;

(4) That the proposed members are in good standing with their respective supervisory authorities; and

(5) That the proposed officers and directors have sufficient experience, ability, and standing to afford reasonable promise of a successful operation.

(b) Within 90 days after receipt of an application for approval of the articles, the department shall issue a certificate either granting or denying permission for the corporation to commence business, provided that in no instance shall the department grant such permission until it has ascertained to its satisfaction that the above conditions and circumstances have been met and that the articles are in accordance with this article.

§ 7-1-744

Upon receiving the approval of the department, the incorporators shall file the same together with the fee specified by Code Section 7-1-862 with the Secretary of State.

§ 7-1-745

In furtherance of its purposes and in addition to the powers now or hereafter conferred on business corporations by the laws of this state, the corporation shall, subject to the restrictions and limitations contained in this Code section, have the following powers:

(1) To elect, appoint, and employ officers, agents, and employees;

(2) To make contracts and incur liabilities for any of the purposes of the corporation provided that the corporation shall not incur any secondary liability by way of the guaranty or endorsement of the obligations of any person or corporation or in any other manner unless the corporation has a substantial interest in the performance of the transaction;

(3) To borrow money and to do all things necessary or desirable to secure aid, assistance, loans, and other financing from its members (whether as member loans or otherwise), from any lending institution, or from any agency established under the Small Business Investment Act of 1958, 1 as amended, or other similar federal or state legislation for any of the purposes of the corporation and to issue therefor its bonds, debentures, notes, or other evidences of indebtedness, whether secured or unsecured, and to secure the same by mortgage, pledge, deed of trust, or other lien on its property, franchise, rights, and privileges of every kind and nature or any part thereof or interest therein without securing shareholder or member approval;

(4) To make loans to any person or corporation and to establish and regulate the terms and conditions with respect to any such loans and the charges for interest and services connected therewith;

(5) To purchase, receive, hold, lease, or otherwise acquire and to sell, convey, transfer, lease, or otherwise dispose of commercial or historical real and personal property and residential projects referred to the corporation by its shareholders or members, together with such rights and privileges as may be incidental and appurtenant thereto and the use thereof, including, but not restricted to, any real or personal property acquired by the corporation from time to time in the satisfaction of debts or enforcement of obligations;

(6) To acquire the good will, business rights, real and personal property, and other assets or any part thereof or interest therein of any persons or corporations and to assume, undertake, or pay the obligations, debts, and liabilities of any such person or corporation; to acquire improved or unimproved real estate for the purpose of constructing residential buildings, industrial plants or business establishments thereon or for the purposes of disposing of such real estate to others for the construction of residential buildings, industrial plants, industrial parks, or business establishments; and to acquire, construct or reconstruct, alter, repair, maintain, operate, sell, convey, transfer, lease, or otherwise dispose of residential buildings, industrial plants, industrial parks, or business establishments;

(7) To acquire, subscribe for, own, sell, hold, assign, transfer, mortgage, pledge, or otherwise dispose of a partnership interest in any partnership or other entity or the stock, shares, bonds, debentures, notes, or other securities and evidences of interest in or indebtedness of any person or corporation and, while the owner or holder thereof, to exercise all the rights, powers, and privileges of ownership, including the right to vote thereon;

(8) To mortgage, pledge, or otherwise encumber any property, right, or thing of value, acquired pursuant to the powers contained in paragraph (5), (6), or (7) of this Code section, as security for the payment of any part of the purchase price therefor;

(9) To cooperate with and avail itself of the facilities of the United States Department of Commerce, the Department of Economic Development, and any other similar state or federal governmental agencies and to cooperate with and assist and otherwise encourage organizations in the various communities of this state in the promotion, assistance, and development of the business prosperity and economic well-being of such communities or of this state or any political subdivision thereof;

(10) To redeem or otherwise reacquire its shares under the circumstances and subject to the restrictions now or hereafter set forth for business corporations by the laws of this state;

(11) To make, amend, and repeal bylaws, not inconsistent with its articles of incorporation or with the laws of this state, for the administration and regulation of the affairs of the corporation, which bylaws may establish internal governance procedures and standards, including, but not limited to, procedures for voting by proxy at and for giving notice of meetings of directors and of shareholders and members, procedures and standards for the payment of dividends, and the delegation by the board of directors of its authority under the articles of incorporation and this article to one or more committees of the board or to officers of the corporation, and which bylaws may give the board of directors or committees thereof the power to pass resolutions necessary or convenient to carry out the purposes of the corporation; and

(12) To do all acts and things necessary or convenient to carry out the powers expressly granted in this article.

1 15 U.S.C.A. § 661 et seq.

§ 7-1-746

Notwithstanding any rule at common law or any provision of any general or special law or any provision in their respective charters, agreements of association, articles of organization, or trust indentures:

(1) Any person, including all domestic corporations organized for the purpose of carrying on business within this state and further including, without implied limitation, public utility companies and insurance companies and foreign corporations licensed to do business within this state and all lending institutions as defined in paragraph (3) of Code Section 7-1-740 and all trusts are authorized to acquire, purchase, hold, sell, assign, transfer, mortgage, pledge, or otherwise dispose of any bonds, securities, or other evidences of indebtedness created by or the shares of the corporation and, while owners of said shares, to exercise all the rights, powers, and privileges of ownership, including the right to vote thereon, all without the approval of any regulatory authority of the state, except as otherwise provided in this article;

(2) All lending institutions are authorized to become members of the corporation and to make loans to the corporation as provided in this article;

(3) Each lending institution which becomes a member of the corporation is authorized to acquire, purchase, hold, sell, assign, transfer, mortgage, pledge, or otherwise dispose of any bonds, securities, or other evidences of indebtedness created by or the shares of the capital stock of the corporation and, while owners of said stock, to exercise all the rights, powers, and privileges of ownership, including the right to vote thereon, all without the approval of any regulatory authority of the State of Georgia, provided that the amount of the capital of the corporation which may be acquired by any member pursuant to the authority granted in this Code section shall not exceed 5 percent of the capital base of such member; and

(4) The amount of shares of the corporation which any member is authorized to acquire pursuant to the authority granted in this Code section is in addition to the amount of shares in the corporation which such member may otherwise be authorized to acquire.

§ 7-1-747

(a) Any lending institution may request membership in the corporation by making application to the board of directors on such form and in such manner as said board of directors may require, and membership shall become effective upon acceptance of such application by said board.

(b) Each member of the corporation shall make member loans to the corporation when called upon by it to do so on such terms and other conditions as shall be approved from time to time by the board of directors, subject to the following conditions:

(1) All loan limits for member loans may, at the option of the board of directors, be established at the $ 1,000.00 amount nearest the amount computed in accordance with this Code section; and

(2) No member loan to the corporation shall be made if immediately thereafter the total amount of the obligations (whether under member loans or otherwise) of the corporation would exceed 50 times the amount then paid in on the capital of the corporation.

(c) The total amount outstanding on member loans to the corporation made by any member at any one time, when added to the amount of the investment in the capital of the corporation then held by such member, shall not exceed the lesser of:

(1) Twenty percent of the aggregate of the capital of the corporation then outstanding plus the total amount then outstanding on all member loans to the corporation, including in said total amount outstanding amounts validly called as member loans but not yet loaned; or

(2) The following limit, to be determined each calendar year of membership on the basis of the audited balance sheet of such member at the close of its fiscal year immediately preceding or, in the case of an insurance company, its last annual statement to the Commissioner of Insurance:

(A) Five percent of the statutory capital base of a bank or trust company;

(B) One-half of 1 percent of the total outstanding loans made by savings and loan associations;

(C) Two and one-half percent of the capital and unassigned surplus of stock insurance companies, except fire insurance companies;

(D) Two and one-half percent of the unassigned surplus of mutual insurance companies, except fire insurance companies;

(E) One-tenth of 1 percent of the assets of fire insurance companies; and

(F) Such limits as may be approved by the board of directors of the corporation for other lending institutions; or

(3) Three million dollars.

(d) Subject to paragraphs (1) and (3) of subsection (c) of this Code section, each call for member loans made by the corporation shall be apportioned among the members of the corporation in such manner that, to the extent feasible, all members shall, after making such member loans, have adjusted loan limits constituting an equal percentage of their respective loan limits. The adjusted loan limit of a member shall be the amount of such member's loan limit, as determined by reference to subsection (c) of this Code section, reduced by the balance of outstanding member loans made by such member to the corporation and the investment in capital of the corporation held by such member at the time of such call.

(e) All member loans to the corporation shall be evidenced by bonds, debentures, notes, or other evidences of indebtedness of the corporation, which shall be freely transferable at all times and which shall bear interest at a rate of interest determined by the board of directors to be the prime rate prevailing at the date of issuance thereof on unsecured commercial loans plus one-fourth of 1 percent or less.

§ 7-1-748

(a) Membership in the corporation shall be for the duration of the corporation, provided that, upon written notice given to the corporation two years in advance, a member may withdraw from membership in the corporation at the expiration of such notice.

(b) A member shall not be obligated to make any loans to the corporation pursuant to calls made subsequent to notice of the intended withdrawal of said member.

§ 7-1-749

(a) The shareholders and the members of the corporation shall have the following powers of the corporation:

(1) To determine the number of and elect directors as provided in Code Section 7-1-751;

(2) To amend its articles as provided in Code Section 7-1-750;

(3) To dissolve the corporation as provided in Code Section 7-1-756; and

(4) To exercise such other of the powers of the corporation, consistent with this article, as may be conferred on the shareholders and the members by the bylaws.

(b) As to all matters requiring action by the shareholders and the members of the corporation, said shareholders and said members shall vote separately thereon by classes; and, except as otherwise provided in this article, such matters shall require the affirmative vote of a majority of the votes to which the shareholders present or represented at the meeting shall be entitled and the affirmative vote of a majority of the votes to which the members present or represented at the meeting shall be entitled.

(c) Each shareholder shall have one vote, in person or by proxy, for each share of stock held by him; and each member shall have one vote, in person or by proxy, except that any member having a loan limit of more than $1,000.00 shall have one additional vote, in person or by proxy, for each additional $1,000.00 which such member is authorized to have outstanding on loans to the corporation at any one time, as determined under subsection (c) of Code Section 7-1-747.

(d) A holder of or subscriber to shares of the corporation or a member of the corporation shall be under no obligation to the corporation or its creditors with respect to such shares, subscriptions, or membership except in the circumstances set forth in Code Section 14-2-620, except that this subsection does not affect the obligation of a member to lend funds to the corporation pursuant to valid call.

§ 7-1-750

(a) Except as provided in subsections (b) and (c) of this Code section and subject to the approval of the department, the articles may be amended by the votes of the shareholders and the members of the corporation, voting separately by classes, and such amendments shall require approval by the affirmative vote of two-thirds of the votes to which the members shall be entitled.

(b) No amendment shall be adopted which is inconsistent with the general purposes expressed in paragraph (3) of subsection (a) of Code Section 7-1-741 or which authorizes any additional class of stock to be issued or which would tend to impair the ability of the department to examine and supervise the corporation.

(c) No amendment of the articles which increases the obligation of a member to make loans to the corporation or makes any change in the principal amount, interest rate, or maturity date or in the security or credit position of any outstanding loan of a member to the corporation or affects a member's right to withdraw from membership as provided in Code Section 7-1-748 or affects a member's voting rights as provided in this article shall be made without the consent of each member affected by such amendment.

(d) Within 30 days after any meeting at which an amendment to the articles is approved, it shall be submitted to the department together with such information as the department shall require. If the department finds in its discretion that the proposed amendment is in conformity with the objectives and requirements of this article, it shall issue its certificate approving the amendment. If the amendment is disapproved, the department shall briefly state its reasons for such action to the corporation. The decision of the department shall be conclusive, except as it may be subject to judicial review as provided in Code Section 7-1-90.

(e) Upon the approval of the department, articles of amendment signed and sworn to by the president, treasurer, and a majority of the directors, setting forth such amendment and due adoption thereof, shall, together with the department's certificate of approval, be submitted to the Secretary of State, who shall examine them and, if he finds that they conform to the requirements of this article, shall so certify and endorse his approval thereon.

§ 7-1-751

The business affairs of the corporation shall be managed and controlled by a board of directors, a president, a vice-president, a secretary, a treasurer, and such other officers and such agents as the corporation shall authorize by its bylaws. The board of directors shall consist of such number, not less than 15 nor more than 21, as shall be determined in the first instance by the incorporators and thereafter annually by the members and the shareholders of the corporation. The board of directors may exercise all the powers of the corporation except such as are conferred by law or by the bylaws of the corporation upon the shareholders or members and shall choose and appoint all the agents and officers of the corporation and fill all vacancies except vacancies in the office of director, which shall be filled as provided in this Code section. The annual meeting shall be held prior to May 1 or, if no annual meeting shall be held in the year of incorporation, then within 90 days after the approval of the articles at a special meeting as provided in this Code section. At such annual meeting or at each special meeting held as provided in this Code section, the members of the corporation shall elect two-thirds of the board of directors and the shareholders shall elect the remaining directors. The directors shall hold office until the next annual meeting of the corporation or special meeting held in lieu of the annual meeting after the election and until their successors are elected and qualified, unless sooner removed in accordance with provisions of the bylaws. Any vacancy in the office of a director elected by the members shall be filled by the directors elected by the members, and any vacancy in the office of a director elected by the shareholders shall be filled by the directors elected by the shareholders. Directors and officers shall not be responsible for losses unless the same shall have been occasioned by the willful misconduct of such directors and officers.

§ 7-1-752

(a) Each year the corporation shall set apart as earned surplus not less than 10 percent of its net earnings for all the preceding fiscal year until such surplus shall be equal in value to one-half of the amount paid in on the capital then outstanding. Whenever the amount of surplus established in this Code section shall become impaired, it shall be built up again to the required amount in the manner provided for its original accumulation. Net earnings and surplus shall be determined by the board of directors after providing for such reserves as said directors deem desirable, and the determination of the directors made in good faith shall be conclusive on all persons.

(b) Corporations organized under this article shall adopt the calendar year as their fiscal year.

§ 7-1-753

The corporation shall not deposit any of its funds in any bank or other financial institution unless such institution has been designated as a depository by a vote of a majority of the directors present at an authorized meeting of the board of directors, exclusive of any director who is an officer or director of the depository so designated. The corporation shall not receive money on deposit.

§ 7-1-754

The department shall exercise the same power and authority over corporations organized under this article as is now or hereafter exercised over banks and trust companies by Articles 1 and 2 of this chapter where such law is not in conflict with this chapter.

§ 7-1-755

(a) The first meeting of the corporation shall be called by a notice signed by three or more of the incorporators, stating the time, place, and purpose of the meeting, a copy of which notice shall be mailed or delivered to each incorporator at least five days before the day appointed for the meeting. Said first meeting may be held without such notice upon agreement in writing to that effect signed by all the incorporators. There shall be recorded in the minutes of the meeting a copy of said notice or of such unanimous agreement of the incorporators.

(b) At such first meeting the incorporators shall organize by the choice, by ballot, of a temporary clerk; by the adoption of bylaws; by the election, by ballot, of directors; and by action upon such other matters within the powers of the corporation as the incorporators may see fit. The temporary clerk shall be sworn and shall make and attest a record of the proceedings. Four of the incorporators shall be a quorum for the transaction of business.

§ 7-1-756

(a) The period of duration of a corporation organized under this article shall be 35 years, subject, however, to the right of its shareholders and the members to dissolve the corporation prior to the expiration of said period as provided in subsection (b) of this Code section, and further subject to any longer period of duration as may be specified in the articles of incorporation as originally filed and approved or as thereafter amended pursuant to Code Section 7-1-750.

(b) The corporation may, upon the votes of the shareholders and the members of the corporation, voting separately by classes, dissolve said corporation; and such dissolution shall require approval by the affirmative vote of two-thirds of the votes to which the shareholders shall be entitled. Upon any dissolution of the corporation, none of the corporation's assets shall be distributed to the shareholders until all sums due the members of the corporation as creditors thereof have been paid in full.

§ 7-1-757

Under no circumstances shall the credit of the State of Georgia be pledged to any corporation organized under this article nor shall acts of such corporation in any manner constitute or result in the creation of any indebtedness of the State of Georgia or any county or municipal corporation therein.

§ 7-1-758

(a) Any tax exemptions, tax credits, or tax privileges granted to banks or trust companies and other financial institutions by any general laws of this state are granted to corporations organized pursuant to this article.

(b) Every corporation organized and engaged in business under this article shall pay an annual state occupational license tax of $50.00. Counties and municipalities are authorized, in addition, to levy the occupational license taxes as prescribed; provided, however, that no county or municipality shall levy any such occupational license tax in a greater amount than those prescribed.

§ 7-1-770

As used in this article:

(1) An association is “local” if the greater portion of its investment in real estate loans is limited to loans on the security of a first lien or security title on real estate. Any such association may purchase real estate loans or interests in real estate loans which are made and owned by any savings and loan association to the extent authorized by the regulations of the department, provided that such regulations shall not permit the purchase of loans or interests in loans of any type or in any amounts (per individual loan or in the aggregate) which are not permitted by law to be purchased by savings and loan associations with principal offices in this state.

(2) An association is “mutual” if all depositors in such association participate in the income of such association and if all borrowers are privileged to vote at least one vote at any meeting of members, it being unnecessary that any borrower should subscribe to or purchase any shares or be entitled to participate in any way in the income of such association.

§ 7-1-777

No savings and loan association or similar corporation existing under the laws of this state or of the United States shall accept deposits in this state except on the premises of an established principal office or branch office operated pursuant to this article. For the purposes of this Code section, the term “branch office” shall be construed to mean any office of such association or corporation which is intended to be permanently established in a fixed location and to be operated at such location on substantially a full-time basis.

§ 7-1-779

No person or corporation, except a savings and loan association actually engaged in carrying on a savings and loan business as contemplated by this article or the laws of the United States, shall transact business under any name or title which contains the term “savings and loan” or combination of the words used in said phrase or use any sign or any letterhead or billhead, circular, or paper of any kind or advertise in any manner which indicates that his or its business is the character or kind of business carried on or transacted by a savings and loan association or which is likely to lead the public to believe that his or its business is that of a savings and loan association.

§ 7-1-780

To secure loans, savings and loan associations shall have a lien without further agreement or pledge upon all deposits with it by a borrower; and, upon default upon any loan, any such association may, without notice to or consent of the borrower, cancel on its books part or all of the amount outstanding to the credit of the borrower not exceeding his obligations to the association and apply such amount in payment of the obligations.

§ 7-1-781

Any other financial institution existing under the laws of this state doing a home financing business may convert itself into a savings and loan association in accordance with Section 5 of the Home Owners' Loan Act, 12 U.S.C. Section 1464, upon a vote of 51 percent or more of the votes of the members cast at an annual meeting or at any special meeting called to consider such action.

§ 7-1-783

Any corporation which has converted itself prior to April 1, 1975, into a savings and loan association under the Home Owners' Loan Act and has received a charter from the Federal Home Loan Bank Board shall be recognized as a savings and loan association, and its federal charter shall be given full credence by the courts of this state to the same extent as if such conversion had taken place under this article.

§ 7-1-786

No savings and loan association with a home office in this state shall be assessed or subjected to taxation by the state or any county, municipality, or other political subdivision taxing authority on its franchise, capital, reserves, surplus, loans, shares, or accounts; except that any real property and any tangible personal property not hereinbefore specifically mentioned, which may be owned by it, shall be subject to taxation to the same extent, according to its value, as all other real and tangible personal property is taxed.

§ 7-1-787

The opening and transfer of deposits in a savings and loan association are exempted from all provisions of law of this state which provide for the supervision and the regulation of the sale of securities, even if the word “shares” or similar terminology is used in connection therewith; and the sale of any such deposits shall be legal without any action or approval whatsoever on the part of any official authorized to license, regulate, and supervise the sale of securities.

§ 7-1-788

No notary public or other public officer shall be disqualified from taking the acknowledgment of or witnessing any instrument, in writing, in which a savings and loan association is interested, by reason of his holding an office in or being a member of or being pecuniarily interested in or employed by such association so interested; and any such acknowledgments or attestations taken prior to April 1, 1975, are validated.

§ 7-1-789

(a) A minor shall be allowed to have deposits in a savings and loan association in his own name, and the deposits made by the minor shall not be subject to the control of his parent, guardian, or trustee. A minor may have third-party payment accounts. A receipt or acquittance signed by such a minor depositor shall be a valid and sufficient release and discharge of such association for any payment of any deposit to such minor. In the transactions involving payments to third parties out of the minor's account, the payment of an order of the minor shall be a valid and sufficient release and discharge of the savings and loan association for any payment of such funds from the minor's account.

(b) Subsection (a) of this Code section shall continue to include, without limitation:

(1) Deposits in such associations by a minor with one or more adults or other minors, as party to and with the same effect as a multiple-party account under Article 8 of this chapter;

(2) The rental to a minor by said associations of a safe-deposit box or other receptacle for the safe deposit of property from such minor (and the receipt of any such property), individually or jointly with one or more adults; and

(3) The dealing with a minor by said associations with respect to such a deposit account, third-party payment account, or safe-deposit agreement without the consent of a parent or guardian and with the same effect as though the minor were an adult.

Any action of the minor with respect to such deposit account, third-party payment account, or safe-deposit agreement shall be binding on the minor with the same effect as though the minor were an adult.

§ 7-1-790

A savings and loan association may receive deposits in the name of an administrator, executor, guardian, trustee, or other fiduciary in trust for a named or an unnamed beneficiary or beneficiaries. Such a deposit and dividends or interest thereon or other rights relating thereto may be paid or delivered, in whole or in part, to such fiduciary or may be exercised by such fiduciary without regard to any notice to the contrary so long as such fiduciary is living and until the association has received notice of the death of such fiduciary. The payment or delivery to any such fiduciary or a receipt or acquittance signed by any such fiduciary, to whom any such payment or any such delivery of rights is made, shall be a valid and sufficient release and discharge of such association for the payment or delivery so made.

§ 7-1-791

Except as provided in Article 8 of this chapter, upon the death of a depositor of a savings and loan association, such association may pay the amount of his deposit or any portion thereof to an executor, administrator, or other fiduciary duly appointed and qualified pursuant to the last will and testament of the depositor or by any court of competent jurisdiction in this state or any other state.

§ 7-1-792

Except as provided in Article 8 of this chapter, if no application for the deposit is made by any person named in Code Section 7-1-791 within 90 days from the death of a depositor, a savings and loan association shall be authorized to apply not more than $1,000.00 of the deposit of such deceased depositor in payment of the funeral expenses of such deceased depositor upon receipt of an itemized statement of such expenses and the affidavit of the undertaker conducting the funeral that said statement was true and correct and had not been paid.

§ 7-1-793

Administrators, executors, guardians, trustees, and other fiduciaries of every kind and nature; insurance companies; charitable, educational, eleemosynary, and public corporations and organizations; municipalities and other public corporations and bodies; and public officials are authorized to invest funds held by them, without any order of any court, in deposits in savings and loan associations which are insured under a federal deposit insurance program; and, to the extent of such insurance, such investments shall be deemed and held to be legal investments for such funds.

§ 7-1-794

Whenever, under the laws of this state or otherwise, a deposit of securities is required for any purpose, the deposits made legal investments by Code Section 7-1-793 shall be acceptable as such security; and, whenever, under the law of this state or otherwise, a bond is required with security, such bond may be furnished and the deposits made legal investments by Code Section 7-1-793 in the amount of such bond shall be acceptable to secure said bond without other security. This Code section and Code Section 7-1-793 are supplemental to any and all other laws relating to and declaring what shall be legal investments for the persons, corporations, organizations, and officials referred to in these Code sections and the laws relating to the deposit of securities and the making and filing of bonds for any purpose.

§ 7-1-795

The original record of deposits in savings and loan associations is the record on the books of the association, and the depositor shall be entitled to a savings account book or certificate which is a duplicate of such record. Those dealing with such savings account books and certificates shall be bound by the record on the books of the association. In the event of the loss or destruction of any such savings account book or certificate, any association may, upon receipt of an affidavit of such loss or destruction, issue a duplicate thereof and remain liable only to the holder or holders as shown on the records of the association. The only way an effective transfer or pledge may be accomplished so as to affect the rights of the association is by transfer on the books of the association in the case of transfer or written notice of a pledge entered on the books of the association and acknowledged in writing in the case of a pledge; and the association shall be protected in paying any part of a deposit to the holder thereof as shown on the books of the association unless it has received written notice of a pledge or transfer thereof.

§ 7-1-796

A savings and loan association paying deposits to an insane or otherwise incompetent depositor or bankrupt depositor or acting upon the release and discharge or authorization of such depositor or acting upon the power of attorney of an insane, deceased, or bankrupt depositor in good faith and without actual knowledge of the insanity or other incompetency, bankruptcy, or death of such depositor shall be protected in so doing and may lawfully charge such payment to the depositor's account.

§ 7-1-810

As used in this article, the term:

(1) “Account” means a contract of deposit of funds between a depositor and a financial institution and includes a checking account, savings account, certificate of deposit, share account, and other like arrangements.

(2) “Beneficiary” means a person named in a trust account as one for whom a party to the account is named as trustee.

(3) “Financial institution” means a savings and loan association as defined in paragraph (31) of Code Section 7-1-4 or any financial institution as defined in paragraph (21) of Code Section 7-1-4.

(4) “Joint account” means an account payable on request to one or more of two or more parties, whether or not mention is made of any right of survivorship.

(5) “Multiple-party account” means any of the following types of account:

(A) A joint account;

(B) A P.O.D. account; or

It does not include accounts established for deposit of funds of a partnership, joint venture, or other association for business purposes; accounts controlled by one or more persons as the duly authorized agent or trustee for a corporation, unincorporated association, or charitable or civic organization; or a regular fiduciary or trust account where the relationship is established other than by deposit agreement.

(6) “Net contribution” of a party to a multiple-party account as of any given time means the sum of all deposits thereto made by or for him, less all withdrawals made by or for him which have not been paid to or applied to the use of any other party, plus a pro rata share of any interest or dividends included in the current balance. The term includes, in addition, any proceeds of deposit life insurance added to the account by reason of the death of the party whose net contribution is in question.

(7) “Party” means a person who, by the terms of the account, has a present right, subject to request, to payment from a multiple-party account. A P.O.D. payee or beneficiary of a trust account is a party only after the account becomes payable to him by reason of his surviving the original payee or trustee. Unless the context otherwise requires, it includes a guardian, conservator, personal representative, or assignee, including an attaching creditor, of a party. It also includes a person identified as a trustee of an account for another, whether or not a beneficiary is named; but it does not include any named beneficiary unless he has a present right of withdrawal.

(8) “Payment” of sums on deposit includes withdrawal, payment on check or other directive of a party, and any pledge of sums on deposit by a party and any setoff or reduction or other disposition of all or part of an account pursuant to a pledge.

(9) “Proof of death” includes a death certificate or official record which is prima-facie proof of death.

(10) “P.O.D. account” means an account payable on request to one person during his or her lifetime or to an incorporated entity and on such person’s death to one or more P.O.D. payees or to one or more persons during their lifetimes or to an incorporated entity and on the death of all of them or the dissolution of the incorporated entity to one or more P.O.D. payees.

(11) “P.O.D. payee” means a person or an incorporated entity designated on a P.O.D. account as one to whom the account is payable on request after the death of one or more persons.

(12) “Request” means a proper request for withdrawal or a check or order for payment which complies with all conditions of the account, including special requirements concerning necessary signatures and regulations of the financial institution; but, if the financial institution conditions withdrawal or payment on advance notice, for purposes of this article the request for withdrawal or payment is treated as immediately effective and a notice of intent to withdraw is treated as a request for withdrawal.

(13) “Sums on deposit” means the balance payable on a multiple-party account, including interest, dividends, and, in addition, any deposit life insurance proceeds added to the account by reason of the death of a party.

(14) “Trust account” means an account in the name of one or more parties as trustee for one or more beneficiaries where the relationship is established by the form of the account and the deposit agreement with the financial institution and there is no subject of the trust other than the sums on deposit in the account; it is not essential that payment to the beneficiary be mentioned in the deposit agreement. A trust account does not include a regular trust account under a testamentary trust or a trust agreement which has significance apart from the account or a fiduciary account arising from a fiduciary relation such as attorney-client.

(15) “Withdrawal” includes payment to a third person pursuant to check or other directive of a party.

§ 7-1-811

Code Sections 7-1-812 through 7-1-814, concerning beneficial ownership as between parties or as between parties and P.O.D. payees or beneficiaries of multiple-party accounts, are relevant only to controversies between those persons and their creditors and other successors and have no bearing on the power of withdrawal of these persons as determined by the terms of account contracts.Code Sections 7-1-816 through 7-1-821 govern the liability of financial institutions which make payments pursuant thereto and their setoff rights.

§ 7-1-812

(a) A joint account belongs, during the lifetime of all parties, to the parties in proportion to the net contributions by each to the sums on deposit, unless there is clear and convincing evidence of a different intent.

(b) A P.O.D. account belongs to the original payee during his lifetime and not to the P.O.D. payee or payees; if two or more parties are named as original payees, during their lifetimes the account belongs to them in proportion to the net contributions by each to the sums on deposit, unless there is clear and convincing evidence of a different intent.

(c) Unless a contrary intent is manifested by the terms of the account or the deposit agreement or there is other clear and convincing evidence of an irrevocable trust, a trust account belongs beneficially to the trustee during his lifetime; and, if two or more parties are named as trustee on the account, during their lifetimes the account belongs to them in proportion to the net contributions by each to the sums on deposit, unless there is clear and convincing evidence of a different intent. If there is an irrevocable trust, the account belongs beneficially to the beneficiary.

§ 7-1-813

(a) Sums remaining on deposit at the death of a party to a joint account belong to the surviving party or parties as against the estate of the decedent, unless there is clear and convincing evidence of a different intention at the time the account is created. If there are two or more surviving parties, the respective ownership of each during his lifetime shall be in proportion to his previous ownership interests under Code Section 7-1-812, augmented by an equal share for each survivor of any interest the decedent may have owned in the account immediately before his death; and the right of survivorship continues between the surviving parties.

(b) If the account is a P.O.D. account, on death of the original payee or of the survivor of two or more original payees, any sums remaining on deposit belong to the P.O.D. payee or to the P.O.D. payees in equal portions if surviving or to the survivor of them if one or more die before the original payee; if two or more P.O.D. payees survive, there is no right of survivorship in event of death of a P.O.D. payee thereafter unless the terms of the account or deposit agreement expressly provide for survivorship between them.

(c) If the account is a trust account, on the death of the trustee or the survivor of two or more trustees, any sums remaining on deposit belong to such person or persons named as beneficiaries who survive the death of the trustee or the survivor of two or more trustees, unless there is clear and convincing evidence of a contrary intent. If two or more beneficiaries survive:

(1) They receive equal portions of the sums contained in the trust account; and

(2) There is no right of survivorship in event of death of any beneficiary thereafter unless the terms of the account or deposit agreement expressly provide for survivorship between them.

(d) In other cases, the death of any party to a multiple-party account has no effect on beneficial ownership of the account other than to transfer the rights of the decedent as part of his estate.

(e) A right of survivorship arising from the express terms of the account or under this Code section, a beneficiary designation in a trust account, or a P.O.D. payee designation cannot be changed by will.

§ 7-1-814

The provisions of Code Section 7-1-813 as to rights of survivorship are determined by the form of the account at the death of a party. Once established, the terms of a multiple-party account can be changed only:

(1) By closing the account and reopening it under different terms; or

(2) By presentation to the financial institution of a modification agreement in a form satisfactory to the financial institution and signed by all parties with a present right of withdrawal.

§ 7-1-815

Any transfers resulting from the application of Code Section 7-1-813 are effective by reason of the account contracts involved in this article and are not to be considered as testamentary.

§ 7-1-816

Financial institutions may enter into multiple-party accounts to the same extent that they may enter into single-party accounts. Any multiple-party account may be paid, on request, to any one or more of the parties. For purposes of establishing net contributions, a financial institution shall not be required to inquire as to the source of funds received for deposit to a multiple-party account or to inquire as to the proposed application of any sum withdrawn from an account.

§ 7-1-817

Any sums in a joint account may be paid, on request, to any party without regard to whether any other party is incapacitated or deceased at the time the payment is demanded; but payment may not be made to the personal representative or heirs of a deceased party unless proof of death is presented to the financial institution showing that the decedent was the last surviving party or unless there is no right of survivorship under Code Section 7-1-813.

§ 7-1-818

Any P.O.D. account may be paid, on request, to any original party to the account. Payment may be made, on request, to the P.O.D. payee or to the personal representative or heirs of a deceased P.O.D. payee upon presentation to the financial institution of proof of death showing that the P.O.D. payee survived all persons named as original payees. Payment may be made to the personal representative or heirs of a deceased original payee if proof of death is presented to the financial institution showing that his or their decedent was the survivor of all other persons named on the account either as an original payee or as P.O.D. payee.

§ 7-1-819

Any trust account may be paid, on request, to any trustee. Payment may be made to the personal representative or heirs of a deceased trustee if proof of death is presented to the financial institution showing that his or their decedent was the survivor of all other persons named on the account either as trustee or beneficiary, unless:

(1) The financial institution, with respect to a trust account as to which there is only one trustee, has received written notice, in a form satisfactory to the financial institution, that the beneficiary has a vested interest not dependent upon his surviving the trustee; or

(2) The financial institution, with respect to a trust account as to which there is more than one trustee, has been provided with a copy of an agreement or resolution of all trustees, in a form satisfactory to the financial institution, to the effect that the beneficiary has a vested interest not dependent upon his surviving the trustees.

Payment may be made, on request, to a beneficiary or beneficiaries or the heirs or representative of a beneficiary or beneficiaries upon presentation to the financial institution of proof of death showing that the beneficiary or beneficiaries survived all persons named as trustees.

§ 7-1-820

Payment made pursuant to Code Section 7-1-816, 7-1-817, 7-1-818, or 7-1-819 discharges the financial institution from all claims for amounts so paid, whether or not the payment is consistent with the beneficial ownership of the account as between parties, P.O.D. payees, or beneficiaries or their successors. The protection here given does not extend to payments made after a financial institution has received written notice from any party able to request present payment to the effect that withdrawals in accordance with the terms of the account should not be permitted.

§ 7-1-821

Without qualifying any other statutory right to setoff or lien and subject to any contractual provision, if a party to a multiple-party account is indebted to a financial institution, the financial institution has a right to setoff against the account in which the party has or had immediately before his death a present right of withdrawal. The amount of the account subject to setoff is that proportion to which the debtor is or was immediately before his death beneficially entitled and, in the absence of proof of net contributions, an equal share with all parties having present rights of withdrawal.

§ 7-1-840

(a) Upon discovery, by report or otherwise, of any apparent violation of any state or federal criminal law which is perpetrated through a deposit or loan account maintained at or which utilizes a monetary instrument issued by a financial institution located in this state or of any state or federal criminal law which relates to a financial institution, the department shall refer the matter to an appropriate law enforcement or prosecuting authority for further action. The appropriate state prosecuting authority shall have the right to submit to the grand juries of the respective counties of the state, or otherwise seek an indictment of, any criminal violations of the laws of Georgia known by it to have occurred in such counties. Similarly, any United States attorney may likewise submit to a grand jury, or otherwise seek an indictment of, any criminal violations of the laws of Georgia which also constitute violations of the laws of the United States applicable to such financial institution. Nothing herein shall be so construed as to prevent the appropriate state prosecuting authority or other persons from proceeding in such cases by affidavit and warrant.

(b) The department may assist state and federal law enforcement agencies in further investigation of apparent violations of state or federal criminal statutes referred to in subsection (a) of this Code section.

(c) Without incurring civil liability or, in the case of the department, violating the provisions of Code Section 7-1-70, any financial institution that is the employer or former employer of a person or the department, whether in its regulatory capacity or as the employer or former employer of a person, may provide information to a financial institution which has employed or is considering employment of such person concerning the known or suspected involvement of such person in an apparent violation of a state or federal law or regulation which has been reported to the state or federal law enforcement or regulatory agency having jurisdiction of the violation unless the information is false and such employer, former employer, or the department knows that it is false and provides it with actual malice. For purposes of this Code section, the terms “financial institution” and “department” shall mean any duly elected or appointed official of such entities.

(d) If any board of directors, director, or officer of any financial institution is required by the department, the Federal Deposit Insurance Corporation, the National Credit Union Administration, or any other federal financial institution supervisory agency to provide any such regulatory entity or the fidelity bond carrier with any information regarding the appearance or suspicion of criminal activity involving any director, officer, agent, employee, or customer of such financial institution, such board of directors, director, or officer shall not incur any civil liability for providing such information unless the information is false and such board of directors, director, or officer knows that it is false and provides it with actual malice.

§ 7-1-841

(a) The following provisions of Title 16 are expressly made applicable to financial institutions, their directors, officers, agents, and employees and persons or corporations having dealings with, supervision over, or other contact with financial institutions:

(1) Article 2 of Chapter 7 of Title 16, relating to damage to property;

(2) Article 3 of Chapter 7 of Title 16, relating to arson and related offenses;

(3) Article 1 of Chapter 7 of Title 16, relating to burglary and related offenses;

(4) Chapter 9 of Title 16, relating to deceptive practices;

(5) Chapter 8 of Title 16, relating to theft, including robbery;

(6) Article 1 of Chapter 10 of Title 16, relating to abuse of government office; and

(7) Article 4 of Chapter 10 of Title 16, relating to perjury and other falsifications.

(b) Nothing in subsection (a) of this Code section shall be construed to indicate that the designated chapters of Title 16 were not applicable to the enumerated financial institutions, persons, or corporations prior to April 1, 1975, or that other provisions of Title 16 are not, in appropriate circumstances, also applicable to the enumerated financial institutions, persons, or corporations.

§ 7-1-842

Any director, officer, agent, or employee of a financial institution who knowingly:

(1) Makes any false entry in any book, report, or statement of the financial institution or who omits or concurs in omitting to make any material entry in its books or accounts with intent in either case to injure or defraud the financial institution or any other company, firm, or person or to deceive any officer of the financial institution, the commissioner, or any examiner and every person who with like intent aids or abets any officer, director, clerk, agent, or employee in making any false entry, report, or statement or omitting to make any material entry on its books and accounts shall be guilty of a felony and, upon conviction, shall be punished by imprisonment for not less than one year nor more than ten years.

(2) While in charge of or employed in a financial institution, allows it to receive a deposit when he or she knows the financial institution to be insolvent shall be guilty of a felony and, upon conviction, shall be punished by imprisonment for not less than one year nor more than ten years if loss or injury shall result to such depositor.

(3) By letterheads, newspaper advertisements, signs, circulars, or otherwise, represents the capital stock of any financial institution to be in excess of the capital actually paid in or who knowingly makes or concurs in making or publishing any written report, exhibit, or statement of its affairs or pecuniary condition containing any material statement therein which is false or who knowingly omits or concurs in omitting any statement required by law or to be contained therein shall be guilty of a felony and, upon conviction, shall be punished by imprisonment for not less than one year nor more than five years.

(4) Uses information obtained through his or her association with the financial institution which he or she serves as a director, officer, agent, or employee, which is not otherwise publicly available, with the intent to realize personal gain or to cause financial harm to another party shall be guilty of a felony and, upon conviction, shall be punished by a fine not to exceed $10,000.00 or twice the amount of improper gain realized, whichever is less, or by imprisonment for not less than one year nor more than five years, or both.

§ 7-1-843

Any officer, director, agent, or employee of any financial institution who shall perform the following acts or deeds shall be guilty of a misdemeanor:

(1) Advertises by any office sign or upon any letterhead, billhead, bank note, receipt, certificate, or circular or on any written or printed paper that the deposits in said financial institution are insured or guaranteed, unless such deposits in said financial institution are, in fact, insured and guaranteed as required by Code Sections 7-1-244 and 7-1-666 or regulation or action of the department pursuant thereto.

(2) Intentionally conceals from the directors of any financial institution or from the committee to whom the directors have delegated authority to pass on loans and discounts any discount or loan made for and in behalf of said financial institution or the purchase or sale of any evidence of indebtedness or agreement for the payment of money.

(3) Uses or applies any part of the capital or other funds of any financial institution to the purchase of shares of its own stock, unless such purchase shall be necessary to prevent loss upon a debt previously contracted in good faith under Code Section 7-1-263 or is otherwise permitted by law.

(4) Concurs in any vote or act of the directors of such financial institution by which it is intended to declare a dividend or reduce or make a distribution of capital, except as authorized by Code Section 7-1-460 or 7-1-461 or otherwise under this chapter or other applicable law.

(5) Discounts or receives any evidence of indebtedness or agreement for the payment of money in payment of any subscription for common or preferred shares or with intent to enable any shareholder to withdraw any part of the money paid by him for shares held in the financial institution.

(6) Knowingly and willfully issues, participates in issuing, or concurs in any vote of the directors to issue any increase of its capital beyond the amount of the capital thereof duly authorized by or in pursuance of law or who knowingly or willfully sells or agrees to sell or who is interested, directly or indirectly, in the sale of any such shares of stock of such financial institution or in any agreement to sell the same.

(7) Certifies any check, draft, or order where the drawer of such check, draft, or order does not have on deposit with the financial institution at the time of such certification an amount of money equal to the amount specified in such check, draft, or order or fails to charge or set aside such amount from the deposit of the drawer immediately for the purpose of paying such certified check, draft, or order when presented.

(8) Makes or consents to the making of any conveyance, assignment, transfer, mortgage, or lien with intent to hinder, delay, or defraud creditors, after insolvency of the financial institution or in contemplation thereof, whether the same is made to an innocent purchaser or to any other person.

§ 7-1-844

Any director, officer, agent, or employee of a financial institution who shall willfully violate or participate in the violation of any of the following provisions of this chapter shall be guilty of a misdemeanor:

(1) Code Section 7-1-37, relating to restrictions on department officials and employees;

(2) Code Section 7-1-62, relating to accounting requirements to be followed by financial institutions;

(3) Code Section 7-1-285, relating to loan limits on banks;

(4) Code Section 7-1-291, relating to borrowing limits on banks;

(5) Code Section 7-1-311, relating to operations as a fiduciary by a trust company;

(6) Code Section 7-1-491, relating to limitations on financing to directors and officers of banks and trust companies;

(7) Code Section 7-1-492, relating to prohibitions applicable to directors, officers, employees, and attorneys of bank and trust companies in dealings with the institutions with which they are connected; or

(8) Code Section 7-1-658, relating to loan limits on credit unions.

§ 7-1-845

(a) Any person or corporation, including any financial institution or its directors, officers, agents, or employees, who shall perform the following acts or deeds shall be guilty of a felony:

(1) Publishes or causes to be published any false statement, expressed either by printing or writing or by signs, pictures, or the like, of or concerning any financial institution as to the assets or liabilities of such financial institution or as to its solvency or ability to meet its obligations or as to its soundness or who shall publish or cause to be published any other false statement so expressed, calculated to affect the credit or standing of such financial institution or to cast suspicion upon its solvency, soundness, or ability to meet its deposits or other obligations in due course;

(2) Falsely circulates any report or makes any false oral statement as to the assets or liabilities of a financial institution or as to its solvency or ability to meet its obligations or as to its soundness or who shall make any other false oral statement calculated to affect the credit or standing of such financial institution or to cast suspicion upon its solvency, soundness, or ability to meet its deposits or other obligations in due course;

(3) Willfully engages in the business of:

(A) A bank in violation of Code Section 7-1-241;

(B) A trust company in violation of Code Section 7-1-242;

(D) Money transmission before receiving a license as required by Code Section 7-1-681;

(E) A foreign bank branch or foreign bank agency before receiving the license required by Article 14 of this chapter or a foreign bank representative office before being registered with the department as required by Article 14 of this chapter;

(F) A business development corporation before approval of the department is granted under Code Section 7-1-743;

(G) Transacting business either directly or indirectly as a mortgage loan originator, mortgage broker, or mortgage lender unless licensed by the department or exempt from licensing pursuant to Code Section 7-1-1001; or

(H) Making installment loans unless licensed by the department or exempt from licensing requirements pursuant to Code Section 7-3-4; or

(4) Being an agent of a money transmitter licensee or such agent's employee who is authorized to sell or issue payment instruments on behalf of a licensee, issues payment instruments directly or indirectly to or for his or her own benefit, or sells or issues payment instruments without accepting funds therefor or sells or issues payment instruments and willfully fails to remit to the licensee the proceeds from the sale or issuance of such payment instruments within five business days from the date of such sale or issuance.

(b) Upon conviction under this Code section such person or corporation shall be punished by imprisonment for not less than one nor more than five years or fined $10,000.00; but, on the recommendation of the jury trying the case, when such recommendation is approved by the judge presiding on the trial, such crime shall be punished as a misdemeanor. If the judge trying the case deems it proper, he may, in fixing the punishment, reduce such felony to a misdemeanor.

§ 7-1-846

Upon conviction of a misdemeanor as prescribed by the several provisions of this chapter, the offender shall be punished as prescribed by Code Section 17-10-3, as now or hereafter amended.

§ 7-1-860

This chapter applies to transactions and events occurring on and after April 1, 1975.

§ 7-1-861

(a) Transactions validly entered into before April 1, 1975, and the rights, duties, and interests flowing from them remain valid thereafter and may be terminated, completed, consummated, or enforced as required or permitted by any statute or other law amended or repealed by this chapter as though such repeal or amendment had not occurred.

(b) The validity of existing articles and charters shall not be impaired by this chapter. Appointments of officers in effect on April 1, 1975, shall continue in force until changed as permitted by this chapter or other applicable law. Regulations which have been issued by the department or the commissioner and fee schedules established by either of them or existing pursuant to statute shall remain in effect until changed pursuant to this chapter.

§ 7-1-862

The Secretary of State shall charge and collect fees with regard to filings by persons subject to the provisions of this chapter to the same extent as are charged and collected with regard to similar filings by corporations organized under Chapter 2 of Title 14, known as the “Georgia Business Corporation Code.”

§ 7-1-910

It is the purpose of this article to require certain reports and records of transactions involving United States currency where such reports and records have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings.

§ 7-1-911

As used in this article, the term:

(1) “Commissioner” means the commissioner of banking and finance.

(2) “Conducts” includes initiating, concluding, or participating in initiating or concluding a transaction.

(3) “Currency” means currency and coin of the United States.

(4) “Currency transaction” means a transaction:

(A) Initiated from the receipt or payment of currency or concluding with the receipt or payment of currency; or

(B) Involving the movement or transfer of monetary value by electronic means other than within the books of account of the same financial institution.

(5) “Department” means the Department of Banking and Finance of the State of Georgia.

(6) “Financial institution” means:

(A) A state or national bank;

(B) A trust company;

(D) A state or federal credit union;

(E) A foreign bank branch or foreign bank agency authorized to do business in this state pursuant to Article 14 of this chapter; or

(F) A licensee under Article 4 or Article 4A of this chapter and such other persons as may be engaged in the business of:

(i) Cashing payment instruments for a fee; or

(ii) Performing transactions by wire or other electronic means to facilitate the movement or transfer of money.

(7) “Knowing that the moneys involved in a currency transaction represent the proceeds of some form of unlawful activity” means that the person knew the moneys involved in the transaction represented proceeds from some form, although not necessarily which form, of activity that constitutes a felony under this Code.

(8) “Monetary instruments” means coin or currency of the United States or of any other country, travelers' checks, personal checks, bank checks, money orders, investment securities in bearer form or otherwise in such form that title thereto passes upon delivery, and negotiable instruments in bearer form or otherwise in such form that title thereto passes upon delivery.

(9) “Person” means natural persons, partnerships, trusts, estates, associations, corporations, and all entities cognizable as legal personalities.

(10) “Specified unlawful activity” means any act or activity constituting an offense punishable as a felony pursuant to the laws of this state or any act or acts constituting a pattern of racketeering activity as that term is defined in Code Section 16-14-3.

(11) “Transaction” includes:

(A) A purchase, sale, loan, pledge, gift, transfer, delivery, or other disposition and, with respect to a financial institution, includes a deposit, withdrawal, transfer between accounts, exchange of currency, loan, extension of credit, purchase or sale of any stock, bond, certificate of deposit, or other monetary instrument, or any other payment, transfer, or delivery by, through, or to a financial institution, by whatever means effected; or

(B) The movement of funds by wire or other means or involving one or more monetary instruments or the use of a financial institution.

§ 7-1-912

(a)(1) Financial institutions and other money service businesses are required by state law to comply with the filing, reporting, and record-keeping requirements provided for in federal law. The department may promulgate regulations that specify additional requirements for currency transaction reports, record keeping, and suspicious activity reports.

(2) Pursuant to federal law, a financial institution must keep a record of any currency transaction deemed suspicious for any reason, including transactions where money laundering is suspected, and file a report of such transaction with the appropriate federal authority. All such suspicious activity reports shall be simultaneously filed with the department, unless by regulation the department deems a federal filing to be adequate.

(3) The provisions of paragraph (1) of this subsection shall not apply to transfers between banks, credit unions, or savings and loan associations chartered under the laws of any state or the United States which do not involve the payment or receipt of currency and which are accomplished through a wire or electronic transfer system operated by the Federal Reserve System, the Federal Home Loan Bank System, or other governmental agency or instrumentality; provided, however, with regard to each such transfer the bank, credit union, or savings and loan association shall maintain a record of the name, address, and tax identification number of its customer, the name and location of the corresponding bank, credit union, or savings and loan association, and the name of the customer of the corresponding bank, credit union, or savings and loan association.

(b) The commissioner shall prescribe such regulations as he may deem appropriate to carry out the purposes of this article. Such regulations shall to the extent feasible be consistent with federal regulations and may provide for exemption of such transactions as the commissioner determines are clearly of a legitimate nature for which mandatory reporting would serve no useful purpose. The regulations shall provide for adequate safeguards against unauthorized currency transactions or transactions otherwise inconsistent with this article.

(c) The commissioner in his discretion may exercise the authority granted in Code Section 7-1-64 to assure that financial institutions subject to this article are in compliance herewith.

(d) No person shall for the purpose of evading the reporting requirements of this Code section:

(1) Cause or attempt to cause a financial institution to fail to file a report required pursuant to this Code section;

(2) Cause or attempt to cause a financial institution to file a report required pursuant to this Code section that contains a material omission or misstatement of fact; or

(3) Structure or assist in structuring or attempt to structure or assist in structuring any currency transaction with one or more financial institutions.

(e) For purposes of this Code section, the term:

(1) “Material omission or misstatement” shall include the furnishing of a false or erroneous name, address, taxpayer identification number, and business, profession, or occupation for the person performing the currency transaction or the beneficiary of such transaction or displaying or otherwise producing physical proof of identity on such persons which is forged, falsified, or otherwise altered; and

(2) “Structuring” of a currency transaction means the division of a transaction which would otherwise be reportable under this Code section into two or more transactions which if considered separately would not be reportable.

§ 7-1-913

The Georgia Bureau of Investigation and the Department of Revenue shall have access to and shall be authorized to inspect and copy any reports filed with the department pursuant to this article. In addition, unless prohibited by federal law or by any agreements with federal authorities, the Georgia Bureau of Investigation and the Department of Revenue shall have access to and shall be authorized to inspect and copy any currency transaction report information received by the department from federal authorities.

§ 7-1-914

(a) For each willful violation of this article, the commissioner may assess upon any financial institution and upon any director, officer, or employee thereof who willfully participates in the violation a civil penalty not exceeding $1,000.00.

(b) In the event of the failure of any person to pay any penalty assessed under this Code section, a civil action for recovery thereof may, in the discretion of the commissioner, be brought in the name of the State of Georgia.

(c) Whoever conducts or attempts to conduct a transaction described in subsection (c) of Code Section 7-1-915 is liable to the State of Georgia for a civil penalty of not more than the amount of the funds involved in the transaction or $10,000.00, whichever is greater.

§ 7-1-915

(a) Except as provided in subsection (b) of this Code section, whoever willfully violates any provision of this article shall be guilty of a misdemeanor.

(b) Whoever willfully violates any provision of this article where the violation is:

(1) Committed in furtherance of the commission of any other violation of Georgia law; or

(2) Committed as part of a pattern of illegal activity involving transactions exceeding $100,000.00 in any 12 month period

shall be guilty of a felony and, upon conviction thereof, shall be punished by a fine of not more than $500,000.00 or by imprisonment for not more than five years, or both.

(c) Whoever, knowing that the moneys involved in a currency transaction represent the proceeds of some form of unlawful activity, conducts or attempts to conduct such a transaction which in fact involves the proceeds of specified unlawful activity:

(1) With the intent to promote the carrying on of specified unlawful activity; or

(2) Knowing that the transaction is designed in whole or in part to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; or to avoid a transaction reporting requirement under this article

shall be sentenced to a fine of not more than $500,000.00 or twice the amount involved in the transaction, whichever is greater, or imprisonment for not more than 20 years, or both.

(d) Nothing in subsection (c) of this Code section nor in subsection (c) of Code Section 7-1-914 shall supersede any provision of law imposing criminal or civil penalties or affording civil remedies in addition to those provided for in this Code section or in Code Section 7-1-914.

§ 7-1-916

All property of every kind used or intended for use in the course of, derived from, or realized through a transaction which in fact involves the proceeds of unlawful activity specified in Chapter 14 of Title 16 or otherwise subject to the provisions of this article shall be subject to forfeiture to the state. Forfeiture shall be had by the same procedure as is set forth in Chapter 16 of Title 9. As used in this Code section, the terms “proceeds” and “property” shall have the same meaning as set forth in Code Section 9-16-2.

§ 7-1-917

In a prosecution under this article, when a currency transaction involves the movement or transfer of digital or electronic money or currency held in an account at a financial institution while knowing the moneys involved in a currency transaction represent the proceeds of some form of unlawful activity, the crime shall be considered as having been committed:

(1) In any county in which the accused exercised control over such digital or electronic money or currency which was the subject of the transaction;

(2) In any county in which any act was performed in furtherance of such transaction; or

(3) In any county in which an alleged victim resides.

§ 7-1-940

As used in this article, the term:

(1) “Board of directors” means any board of directors of a corporation created under this article.

(2) “Corporation” means a Georgia small minority business development corporation created under this article;

(4) “Loan limit” means, for any member, the maximum amount permitted to be outstanding at any one time on member loans made by such member to the corporation, as determined under this article.

(6) “Member loan” means a loan made by a member upon the call of the corporation pursuant to Code Section 7-1-947.

(7) “Minority person” means a lawful permanent resident of the United States who is:

(A) Black;

(B) Hispanic;

(D) Native American; or

(E) Asian-Indian American.

(8) “Small minority business” means any for profit corporation, partnership, proprietorship, association, or other business entity which:

(A) Is at least 51 percent owned and controlled by minority persons and whose management and daily operation are controlled by one or more of the minority persons who own it;

(B) Has gross revenue of less than $6 million in a 12 month fiscal year;

(D) Employs less than 500 people; and

(E) Is not a lending institution.

§ 7-1-941

(a) Five or more persons competent to contract, a majority of whom shall be residents of this state, who may desire to create a small minority business development corporation under this article, for the purpose of promoting, developing, and advancing small minority business and, to that end, to exercise the powers and privileges provided in this article, may be incorporated by presenting articles to the Secretary of State, as provided in this Code section and Code Section 7-1-942. The articles shall contain:

(1) The name of the corporation, which shall include the words “Small Minority Business Development Corporation of Georgia,” and a recitation that the corporation is organized under this article;

(2) The location of its initial registered office, but such corporation may have branch offices in such other places within the state as may be fixed by the board of directors;

(3) The purposes for which the corporation is founded, which shall include: to promote, stimulate, develop, and advance small minority business and thereby promote, stimulate, develop, and advance the business prosperity and economic welfare of the State of Georgia; to encourage and assist, through loans, investments, or other business transactions, in the location of the small minority business and industry in this state and to rehabilitate and assist existing small minority business and industry; to stimulate and assist in the expansion of all kinds of small minority business activity which will tend to promote the small minority business development and maintain the economic stability of this state; to provide maximum opportunities for minority employment, encourage thrift, and improve the standard of living of minorities and other citizens of this state; similarly to cooperate and act in conjunction with other organizations, public or private, in the promotion and advancement of industrial, commercial, agricultural, and recreational small minority business developments in this state; and to provide financing for the promotion, development, and conduct of all kinds of small minority business activity in this state;

(6) The amount and number of authorized shares, the par value of each share, and the minimum amount of capital with which it shall do business and, if there is more than one class of stock, a description of the different classes. The minimum amount of capital with which the corporation shall commence business shall not be less than $50,000.00.

The articles may also contain any provisions consistent with the laws of this state for the regulation of the affairs of the corporation.

§ 7-1-942

Whenever the articles shall have been filed in the office of the Secretary of State and approved by the department and all filing fees and taxes prescribed by law have been paid, said entity shall constitute a corporation. Said corporation shall not be authorized to commence business until its articles are approved by the department. Upon such approval by the department, authorized stock of the corporation may thereafter be issued.

§ 7-1-943

(1) That the public need and advantage will be promoted by the establishment of the corporation;

(2) That conditions in the locality in which the corporation will transact business afford reasonable promise of a successful operation;

(3) That the applicants may legally invest in the stock of the corporation and that such investment would not be to the detriment of the applicants; and

(4) That the proposed officers and directors have sufficient experience, ability, and standing to afford reasonable promise of a successful operation.

§ 7-1-944

Upon receiving the approval of the department, the incorporators shall file the same together with the fee specified by Code Section 7-1-862 with the Secretary of State.

§ 7-1-945

(1) To elect, appoint, and employ officers, agents, and employees;

(2) To make contracts and incur liabilities for any of the purposes of the corporation, provided that the corporation shall not incur any secondary liability by way of the guaranty or endorsement of the obligations of any person or corporation or in any other manner;

(3) To borrow money and to do all things necessary or desirable to secure aid, assistance, loans, and other financing from its members (whether as member loans or otherwise), from any lending institution, or from any agency established under federal or state law for any of the purposes of the corporation and to issue therefor its bonds, debentures, notes, or other evidences of indebtedness, whether secured or unsecured, and to secure the same by mortgage, pledge, deed of trust, or other lien on its property, franchise, rights, and privileges of every kind and nature or any part thereof or interest therein without securing shareholder or member approval;

(4) To make loans to any small minority business and to establish and regulate the terms and conditions with respect to any such loans and the charges for interest and services connected therewith; provided, however, that the corporation shall not approve any application for a loan unless and until the small minority business applying for said loan shall show that such business has applied for the loan through ordinary lending channels and that the loan has been refused by at least two lending institutions that would be qualified by law to make such a loan, it not being the intention of this article to take from any lending institution any such loans or commitments as may be desired by such organizations generally in the ordinary course of their business;

(5) To purchase, receive, hold, lease, or otherwise acquire and to sell, convey, transfer, lease, or otherwise dispose of real and personal property, together with such rights and privileges as may be incidental and appurtenant thereto and the use thereof, including, but not restricted to, any real or personal property acquired by the corporation from time to time in the satisfaction of debts or enforcement of obligations;

(6) To acquire the good will, business rights, real and personal property, and other assets or any part thereof or interest therein of any small minority business and to assume, undertake, or pay the obligations, debts, and liabilities of any such small minority business; to acquire improved or unimproved real estate for the purpose of constructing small minority business establishments thereon or for the purposes of disposing of such real estate to others for the construction of small minority business establishments; and to acquire, construct or reconstruct, alter, repair, maintain, operate, sell, convey, transfer, lease, or otherwise dispose of small minority business establishments;

(7) To acquire, subscribe for, own, sell, hold, assign, transfer, mortgage, pledge, or otherwise dispose of the stock, shares, bonds, debentures, notes, or other securities and evidences of interest in or indebtedness of any small minority business and, while the owner or holder thereof, to exercise all the rights, powers, and privileges of ownership, including the right to vote thereon;

(9) To cooperate with and avail itself of the facilities of the United States Department of Commerce, the Department of Economic Development, and any other similar state or federal governmental agencies and to cooperate with and assist and otherwise encourage organizations in the various communities of this state in the promotion, assistance, and development of small minority business and the economic well-being of such communities or of this state or any political subdivision thereof;

(10) To redeem or otherwise reacquire its shares under the circumstances and subject to the restrictions now or hereafter set forth for business corporations by the laws of this state;

(11) To make, amend, and repeal bylaws, not inconsistent with its articles of incorporation or with the laws of this state, for the administration and regulation of the affairs of the corporation, which bylaws may establish internal governance procedures and standards, including, but not limited to, procedures for voting by proxy at and for giving notice of meetings of directors and of shareholders and members and the delegation by the board of directors of its authority under the articles of incorporation and this article to one or more committees of the board or to officers of the corporation, and which bylaws may give the board of directors or committees thereof the power to pass resolutions necessary or convenient to carry out the purposes of the corporation;

(12) To contract with the Small Business Development Centers of the University System of Georgia and economic development centers of other colleges and universities, which centers shall also be authorized to contract with the corporation, for the performance of loan application and packaging functions, market studies, and such other activities necessary or convenient to carry out the purposes of the corporation;

(13) To provide technical assistance for both public and private sources of contract opportunities for small minority businesses;

(14) To provide equity funding as authorized for Minority Enterprise Small Business Investment Corporations through the federal Small Business Administration;

(15) To provide for import and export financing for small minority businesses; and

(16) To do all acts and things necessary or convenient to carry out the powers expressly granted in this article.

§ 7-1-946

(1) Any person, including all domestic corporations organized for the purpose of carrying on business within this state and further including, without implied limitation, public utility companies and insurance companies and foreign corporations licensed to do business within this state and all lending institutions as defined in Code Section 7-1-940 and all trusts are authorized to acquire, purchase, hold, sell, assign, transfer, mortgage, pledge, or otherwise dispose of any bonds, securities, or other evidences of indebtedness created by or the shares of the corporation and, while owners of said shares, to exercise all the rights, powers, and privileges of ownership, including the right to vote thereon, all without the approval of any regulatory authority of the state, except as otherwise provided in this article;

(2) All lending institutions are authorized to become members of the corporation and to make loans to the corporation as provided in this article and such membership shall not constitute a violation of the prohibitions contained in Code Section 7-6-1;

§ 7-1-947

(1) All loan limits for member loans may, at the option of the board of directors, be established at the $1,000.00 amount nearest the amount computed in accordance with this Code section; and

(A) Five percent of the statutory capital base of a bank or trust company;

(B) One-half of 1 percent of the total outstanding loans made by savings and loan associations;

(C) Two and one-half percent of the capital and unassigned surplus of stock insurance companies, except fire insurance companies;

(D) Two and one-half percent of the unassigned surplus of mutual insurance companies, except fire insurance companies;

(E) One-tenth of 1 percent of the assets of fire insurance companies; and

(F) Such limits as may be approved by the board of directors of the corporation for other lending institutions; or

(3) Seven hundred fifty thousand dollars.

(d) Subject to paragraphs (1) and (3) of subsection (c) of this Code section, each call for member loans made by the corporation shall be prorated among the members of the corporation in substantially the same proportion that the adjusted loan limit of each member bears to the aggregate of the adjusted loan limits of all members. The adjusted loan limit of a member shall be the amount of such member's loan limit, as determined by reference to paragraph (2) of subsection (c) of this Code section, reduced by the balance of outstanding member loans made by such member to the corporation and the investment in capital of the corporation held by such member at the time of such call.

§ 7-1-948

(b) A member shall not be obligated to make any loans to the corporation pursuant to calls made subsequent to notice of the intended withdrawal of said member.

§ 7-1-949

(a) The shareholders and the members of the corporation shall have the following powers of the corporation:

(1) To determine the number of and elect directors as provided in Code Section 7-1-951;

(2) To amend its articles as provided in Code Section 7-1-950;

(3) To dissolve the corporation as provided in Code Section 7-1-956; and

(4) To exercise such other of the powers of the corporation, consistent with this article, as may be conferred on the shareholders and the members by the bylaws.

(d) A holder of or subscriber to shares of the corporation or a member of the corporation shall be under no obligation to the corporation or its creditors with respect to such shares, subscriptions, or membership except in the circumstances set forth in Code Section 14-2-622, except that this subsection does not affect the obligation of a member to lend funds to the corporation pursuant to valid call.

§ 7-1-950

(b) No amendment shall be adopted which is inconsistent with the general purposes expressed in paragraph (3) of subsection (a) of Code Section 7-1-941 or which authorizes any additional class of stock to be issued or which would tend to impair the ability of the department to examine and supervise the corporation.

(c) No amendment of the articles which increases the obligation of a member to make loans to the corporation or makes any change in the principal amount, interest rate, or maturity date or in the security or credit position of any outstanding loan of a member to the corporation or affects a member's right to withdraw from membership as provided in Code Section 7-1-948 or affects a member's voting rights as provided in this article shall be made without the consent of each member affected by such amendment.

§ 7-1-951

The business affairs of the corporation shall be managed and controlled by a board of directors, a president, a vice-president, a secretary, a treasurer, and such other officers and such agents as the corporation shall authorize by its bylaws. The board of directors shall consist of such number, not less than nine nor more than 15, as shall be determined in the first instance by the incorporators and thereafter annually by the members and the shareholders of the corporation. The board of directors may exercise all the powers of the corporation except such as are conferred by law or by the bylaws of the corporation upon the shareholders or members and shall choose and appoint all the agents and officers of the corporation and fill all vacancies except vacancies in the office of director, which shall be filled as provided in this Code section. The annual meeting shall be held prior to May 1 or, if no annual meeting shall be held in the year of incorporation, then within 90 days after the approval of the articles at a special meeting as provided in this Code section. At such annual meeting or at each special meeting held as provided in this Code section, the members of the corporation shall elect one-fifth of the board of directors and the shareholders shall elect the remaining directors. The directors shall hold office until the next annual meeting of the corporation or special meeting held in lieu of the annual meeting after the election and until their successors are elected and qualified, unless sooner removed in accordance with provisions of the bylaws. Any vacancy in the office of a director elected by the members shall be filled by the directors elected by the members, and any vacancy in the office of a director elected by the shareholders shall be filled by the directors elected by the shareholders. Directors and officers shall not be responsible for losses unless the same shall have been occasioned by the willful misconduct of such directors and officers. Directors shall serve without compensation.

§ 7-1-952

(a) Each year the corporation shall set apart its net earnings for all the preceding fiscal year. Whenever the amount of minimum capital established in Code Section 7-1-941 shall become impaired, it shall be built up again to the required amount in the manner provided for its original accumulation. Net earnings and surplus shall be determined by the board of directors after providing for such reserves as said directors deem desirable, and the determination of the directors made in good faith shall be conclusive on all persons.

(b) Corporations organized under this article shall adopt the calendar year as their fiscal year.

§ 7-1-953

§ 7-1-954

§ 7-1-955

§ 7-1-956

(a) The period of duration of the corporation shall be 35 years, subject, however, to the right of its shareholders and the members to dissolve the corporation prior to the expiration of said period as provided in subsection (b) of this Code section.

§ 7-1-957

§ 7-1-958

(a) Any tax exemptions, tax credits, or tax privileges granted to banks or trust companies and other lending institutions by any general laws of this state are granted to corporations organized pursuant to this article.

§ 7-1-1000

As used in this article, the term:

(1) “Affiliate” or “person affiliated with” means, when used with reference to a specified person, a person who directly, indirectly, or through one or more intermediaries controls, is controlled by, or is under common control with the person specified. Any beneficial owner of 10 percent or more of the securities of a person or any executive officer, director, trustee, joint venturer, or general partner of a person is an affiliate of such person unless the shareholder, executive officer, director, trustee, joint venturer, or general partner shall prove that he or she in fact does not control, is not controlled by, or is not under common control with such person.

(2) “Audited financial statement” means the product of the examination of financial statements in accordance with generally accepted auditing standards by an independent certified public accountant, which product consists of an opinion on the financial statements indicating their conformity with generally accepted accounting principles.

(3) “Commissioner” means the commissioner of banking and finance.

(4) “Commitment” or “commitment agreement” means a statement by a lender required to be licensed or registered under this article that sets forth the terms and conditions upon which the lender is willing to make a particular mortgage loan to a particular borrower.

(5) “Control,” including “controlling,” “controlled by,” and “under common control with,” means the direct or indirect possession of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting or nonvoting securities, by contract, or otherwise.

(5.1) “Covered employee” means any employee of a mortgage lender or mortgage broker who is involved in residential mortgage loan related activities for property located in Georgia and includes, but is not limited to, a mortgage loan originator, processor, or underwriter, or other employee who has access to residential mortgage loan origination, processing, or underwriting information.

(6) “Department” means the Department of Banking and Finance.

(7) “Depository institution” has the same meaning as in Section 3 of the Federal Deposit Insurance Act, 12 U.S.C. Section 1813(c), and includes any credit union.

(8) “Dwelling” means a residential structure that contains one to four units, whether or not that structure is attached to real property pursuant to Regulation Z Section 226.2(a)(19). The term includes an individual condominium unit, cooperative unit, mobile home, and trailer if it is used as a residence.

(9) “Executive officer” means the chief executive officer, the president, the principal financial officer, the principal operating officer, each vice president with responsibility involving policy-making functions for a significant aspect of a person's business, the secretary, the treasurer, or any other person performing similar managerial or supervisory functions with respect to any organization whether incorporated or unincorporated.

(10) “Extortionate means” means the use or the threat of violence or other criminal means to cause harm to the person, reputation of the person, or property of the person.

(11) “Federal banking agencies” means the Comptroller of the Currency, the National Credit Union Administration, and the Federal Deposit Insurance Corporation. Such term shall also include the Board of Governors of the Federal Reserve System.

(12) “Georgia Residential Mortgage Act” means this article, which also includes certain provisions in order to implement the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008.

(13) “Individual” means a natural person.

(14) “License” means a license issued by the department under this article to act as a mortgage loan originator, mortgage lender, or mortgage broker.

(15) “Loan processor or underwriter” means an individual who performs clerical or support duties as an employee at the direction of and subject to the supervision and instruction of a person licensed or exempt from licensing. For purposes of this paragraph, “clerical or support duties” may include, subsequent to the receipt of an application, the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan; and communicating with a consumer to obtain the information necessary for the processing or underwriting of a loan, to the extent that such communication does not include offering or negotiating loan rates or terms or counseling consumers about residential mortgage loan rates or terms. An individual engaging solely in loan processor or underwriter activities shall not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that such individual can or will perform any of the activities of a mortgage loan originator.

(16) “Lock-in agreement” means a written agreement whereby a lender or a broker required to be licensed or registered under this article guarantees for a specified number of days or until a specified date the availability of a specified rate of interest for a mortgage loan, a specified formula by which the rate of interest will be determined, or a specific number of discount points if the mortgage loan is approved and closed within the stated period of time.

(17) “Makes a mortgage loan” means to advance funds, offer to advance funds, or make a commitment to advance funds to an applicant for a mortgage loan.

(18) “Misrepresent” means to make a false statement of a substantive fact. Misrepresent may also mean to intentionally engage in any conduct which leads to a false belief which is material to the transaction.

(19)(A) “Mortgage broker” means any person who directly or indirectly solicits, processes, places, or negotiates mortgage loans for others; offers to solicit, process, place, or negotiate mortgage loans for others; or closes mortgage loans which may be in the mortgage broker's own name with funds provided by others, and which loans are assigned to the mortgage lenders providing the funding of such loans within 24 hours of the funding.

(B) The term does not include a retailer or retail broker of a manufactured or mobile home as defined in Code Section 8-2-131 or a residential industrialized building as defined in Code Section 8-2-111:

(i) Whose residential mortgage loan activities are limited to compiling and transmitting residential mortgage loan applications along with related supporting documentation to mortgage lenders who are licensed or exempt from the licensing provisions of this article or communicating with residential mortgage loan applicants as necessary to obtain additional documents that complete the residential mortgage loan application to those licensed or exempt mortgage lenders; and

(ii) Who does not receive any payment or fee from any person for assisting the applicant to apply for or obtain financing to purchase the manufactured home, mobile home, or residential industrialized building.

(C) The term does not include an employee of a retailer or retail broker of a manufactured or mobile home as defined in Code Section 8-2-131 or a residential industrialized building as defined in Code Section 8-2-111 who:

(i) Satisfies the requirements set forth in paragraph (B) of this paragraph;

(ii) Is acting within the scope of employment and under the supervision of the retailer or retail broker as an employee and not as an independent contractor;

(iii) Is employed by only one such retailer or retail broker and shall be at all times eligible for employment in compliance with the provisions and prohibitions of Code Section 7-1-1004;

(iv) Has not been issued a cease and desist order in the past five years if such order was based on a violation of Code Section 7-1-1002 or 7-1-1013; and

(v) Has not had a mortgage lender, mortgage broker, or mortgage loan originator license revoked within the past five years.

(20) “Mortgage lender” means any person who directly or indirectly makes, originates, underwrites, holds, or purchases mortgage loans or who services mortgage loans.

(21) “Mortgage loan” means a loan or agreement to extend credit made to a natural person, which loan is secured by a deed to secure debt, security deed, mortgage, security instrument, deed of trust, or other document representing a security interest or lien upon any interest in one-to-four family residential property located in Georgia, regardless of where made, including the renewal or refinancing of any such loan.

(22) “Mortgage loan originator” means an individual who for compensation or gain or in the expectation of compensation or gain takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan. Generally, this does not include an individual engaged solely as a loan processor or underwriter except as otherwise provided in subsection (a.1) of Code Section 7-1-1002; a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with Georgia law unless the person or entity is compensated by a mortgage lender, mortgage broker, or other mortgage loan originator or by any agent of such mortgage lender, mortgage broker, or other mortgage loan originator; and does not include a person or entity solely involved in extensions of credit relating to time-share plans, as that term is defined in 11 U.S.C. Section 101(53D).

(23) “Nationwide Multistate Licensing System and Registry” means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of licensed mortgage loan originators, mortgage loan brokers, and mortgage loan lenders, or its successor.

(24) “Nontraditional mortgage product” means any mortgage product other than a 30 year fixed rate mortgage.

(25) “Person” means any individual, sole proprietorship, corporation, limited liability company, partnership, trust, or any other group of individuals, however organized.

(26) “Real estate brokerage activity” means any activity that involves offering or providing real estate brokerage services to the public, including acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property; bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property; negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property, other than in connection with providing financing with respect to any such transaction; engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law; and offering to engage in any activity or act in any capacity described herein.

(27) “Registered mortgage loan originator” means any individual who meets the definition of mortgage loan originator, is registered with and maintains a unique identifier through the Nationwide Multistate Licensing System and Registry, and is an employee of:

(A) A depository institution;

(B) A subsidiary that is:

(i) Owned and controlled by a depository institution; and

(ii) Regulated by a federal banking agency; or

(28) “Registrant” means any person required to register pursuant to Code Sections 7-1-1001 and 7-1-1003.2.

(29) “Residential property” means improved real property used or occupied, or intended to be used or occupied, as the primary residence of a natural person. Such term does not include rental property or second homes. A natural person can have only one primary residence.

(30) “Residential mortgage loan” means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling, as defined in 15 U.S.C. Section 1602 of the Truth in Lending Act, or residential real estate upon which is constructed or intended to be constructed a dwelling.

(31) “Residential real estate” means any real property located in Georgia upon which is constructed or intended to be constructed a dwelling.

(32) “Service a mortgage loan” means the collection or remittance or the right to collect or remit payments of principal, interest, trust items such as insurance and taxes, and any other payments pursuant to a mortgage loan.

(33) “Ultimate equitable owner” means a natural person who, directly or indirectly, owns or controls an ownership interest in a corporation or any other form of business organization, regardless of whether such natural person owns or controls such ownership interest through one or more natural persons or one or more proxies, powers of attorney, nominees, corporations, associations, limited liability companies, partnerships, trusts, joint-stock companies, other entities or devices, or any combination thereof.

(34) “Unique identifier” means a number or other identifier assigned by protocols established by the Nationwide Multistate Licensing System and Registry.

§ 7-1-1001

(a) The following persons shall not be required to obtain a mortgage loan originator, mortgage broker, or mortgage lender license and shall not be subject to the provisions of this article but may be subject to registration requirements, if registration of such persons is required by this article:

(1) Any lender authorized to engage in business as a bank, credit card bank, savings institution, or credit union under the laws of the United States, any state or territory of the United States, or the District of Columbia, the deposits of which are federally insured;

(2) Any wholly owned subsidiary of any lender described in paragraph (1) of this subsection. Any subsidiary that violates any applicable law of this article may be subject to a cease and desist order as provided for in Code Section 7-1-1018;

(2.1) Any wholly owned subsidiary of any bank holding company; provided, however, that such subsidiary shall be subject to registration requirements in order to facilitate the department's handling of consumer inquiries. Such requirements are contained in Code Section 7-1-1003.3;

(3) Registered mortgage loan originators, when acting for an entity described in paragraph (1) or (2) of this subsection. To qualify for this exemption, an individual shall be registered with and maintain a unique identifier through registration with the Nationwide Multistate Licensing System and Registry;

(4) Any individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of such individual. For purposes of this exemption, the term “immediate family member” means a spouse, child, sibling, parent, grandparent, or grandchild. Immediate family members shall include stepparents, stepchildren, stepsiblings, and adoptive relationships;

(5) An attorney licensed to practice law in Georgia who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator;

(6) A Georgia licensed real estate broker or real estate salesperson not actively engaged in the business of negotiating mortgage loans or a Georgia licensed real estate salesperson providing information to a lender or its agent related to an existing or potential short sale transaction in which a separate fee is not received by such real estate broker or real estate salesperson; provided, however, that such real estate broker or real estate salesperson who directly or indirectly negotiates, places, or finds a mortgage for others shall not be exempt from the provisions of this article;

(7) Any person performing any act relating to mortgage loans under order of any court;

(8) Any natural person or the estate of or trust created by a natural person making a mortgage loan with his or her own funds for his or her own investment, including those natural persons or the estates of or trusts created by such natural persons who make a purchase money mortgage for financing sales of their own property;

(9) Any agency, division, or instrumentality of the federal government of the United States of America; the government of the State of Georgia; the government of any other state of the United States; or any county or municipal government of the State of Georgia. This includes, but is not limited to, the Georgia Housing and Finance Authority, the Georgia Development Authority, the Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage Corporation (FHLMC), the Government National Mortgage Association (GNMA), the United States Department of Housing and Urban Development (HUD), the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), the Farmers Home Administration (FmHA), and the Farm Credit Administration and its chartered agricultural credit associations;

(10) Any individual who offers or negotiates terms of a residential mortgage loan secured by a dwelling that serves as the individual's residence;

(11) Any person who makes a mortgage loan to an employee of such person as an employment benefit;

(12) Any licensee under Chapter 3 of this title, the “Georgia Installment Loan Act,” provided that any mortgage loan made by such licensee is for $3,000.00 or less;

(13) Nonprofit corporations making mortgage loans to promote home ownership or improvements for the disadvantaged;

(14) A natural person employed by a licensed or registered mortgage broker, a licensed or registered mortgage lender, or any person exempted from the mortgage broker or mortgage lender licensing requirements of this article when acting within the scope of employment and under the supervision of the mortgage broker or mortgage lender or exempted person as an employee and not as an independent contractor, except those natural persons exempt from licensure as a mortgage broker or mortgage lender under paragraph (17) of this subsection. To be exempt from licensure as a mortgage broker or mortgage lender, a natural person shall be employed by only one such employer and shall be at all times eligible for employment in compliance with the provisions and prohibitions of Code Section 7-1-1004. Such natural person, who meets the definition of mortgage loan originator provided in paragraph (22) of Code Section 7-1-1000, shall be subject to mortgage loan originator licensing requirements. A natural person against whom a cease and desist order has become final shall not qualify for this exemption while under the employment time restrictions of subsection (p) of Code Section 7-1-1004 if such order was based on a violation of Code Section 7-1-1002 or 7-1-1013 or whose license was revoked within five years of the date such person was hired;

(15) Any person who purchases mortgage loans from a mortgage broker or mortgage lender solely as an investment and who is not in the business of brokering, making, purchasing, or servicing mortgage loans;

(16) Any natural person who makes five or fewer mortgage loans in any one calendar year. A person other than a natural person who makes five or fewer mortgage loans in any one calendar year shall not be exempt from the licensing requirements of this article;

(17)(A) A natural person who is under an exclusive written independent contractor agreement with any person that is a licensed mortgage broker or mortgage lender, so long as such licensed mortgage broker or mortgage lender also meets the following requirements, subject to the review and approval of the department:

(i) The licensee continuously provides a surety bond as required by Code Section 7-1-1003.2 in the amount of $150,000.00 plus $50,000.00 per exempt natural person, not to exceed a maximum of $2 million to cover its activities as well as the activities of all of its natural persons exempted by this paragraph;

(ii) The licensee has applied for and been granted a mortgage broker or mortgage lender license, consistent with the provisions of this article and renewable annually;

(iii) The licensee has paid applicable fees for this license, which license fees shall be the sum of the cost of the individual mortgage broker license fees if each exempt natural person received a mortgage broker license;

(iv) The licensee has full and direct financial responsibility for the mortgage activities of such natural person and full and direct responsibility for the proper education of such natural person, the handling of consumer complaints related to such natural person, and the supervision of the mortgage activities of such natural person. The licensee shall supervise such natural person on an ongoing and regular basis and shall be accountable for the mortgage activities of such natural person;

(v) The licensee or the parent company if the licensee is a wholly owned subsidiary of or solely managed by the parent company:

(I) Files reports under Section 13(a) or 15(d) of the Securities Exchange Act of 1934; 1

(II) Has a market capitalization in excess of $4 billion at the time of the initial application for a mortgage broker or mortgage lender license based on the number of outstanding shares at the end of the quarter as disclosed in the most recent Form 10-Q filed with the United States Securities and Exchange Commission; and

(III) Has equity securities that are listed on the New York Stock Exchange, the National Association of Securities Dealers Automated Quotations, or other stock market approved by the department in writing;

(vi) At the time of the initial application for a mortgage broker or mortgage lender license, the licensee has never had a mortgage lender license or mortgage broker license revoked or suspended in Georgia or any other state;

(vii) The licensee is licensed as a mortgage lender or mortgage broker in ten or more states; and

(viii) At the time of the initial application for a mortgage broker or mortgage lender license, the licensee has received at least a satisfactory evaluation in the most recent examination conducted by the majority of the states in which it has a mortgage broker or mortgage lender license and has adequately addressed with the department any unsatisfactory evaluations in the most recent examination conducted by any state in which it has a mortgage broker or mortgage lender license.

(B) To maintain the exemption, a natural person shall:

(i) Solicit, process, place, or negotiate a mortgage loan to be brokered or made solely by the licensee;

(ii) Be at all times in compliance with this article, including the provisions and prohibitions of Code Section 7-1-1013, the provisions and prohibitions applicable to employees under Code Section 7-1-1004, and the department's rules and regulations;

(iii) Be licensed as a mortgage loan originator in Georgia and engages in residential mortgage related activity exclusively for the licensee; and

(iv) Be licensed as an insurance agent with the office of the Commissioner of Insurance or registered as a broker-dealer agent with the Secretary of State.

(18)(A) An employee of a bona fide nonprofit corporation who acts as a mortgage loan originator only with respect to his or her work duties with the bona fide nonprofit corporation and who acts as a mortgage loan originator only with respect to mortgage loans with terms that are favorable to the borrower shall be exempt from obtaining a mortgage loan originator license. In order for a corporation to be considered a bona fide nonprofit corporation under this paragraph, the department shall determine, under criteria and pursuant to processes established by the department, that the nonprofit corporation:

(i) Has the status of a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986;

(ii) Promotes affordable housing;

(iii) Conducts its activities in a manner that serves public or charitable purposes, rather than commercial purposes;

(iv) Receives funding and revenue and charges fees in a manner that does not incentivize it or its employees to act other than in the best interests of its clients;

(v) Compensates its employees in a manner that does not incentivize employees to act other than in the best interests of its clients;

(vi) Provides or identifies for the borrower mortgage loans with terms favorable to the borrower and comparable to mortgage loans and housing assistance provided under government housing assistance programs. In order for mortgage loans to have terms that are favorable to the borrower, the department shall determine that the terms are consistent with loan origination in a public or charitable context, rather than in a commercial context; and

(vii) Satisfies the exemption from licensure set forth in paragraph (13) of this subsection.

(B) The department shall periodically examine the books and activities of an organization it has previously identified as a bona fide nonprofit corporation for purposes of this paragraph in order to determine if it continues to meet the criteria for such status under subparagraph (A) of this paragraph. In conducting such an examination, the department shall have all of the powers set forth in Code Section 7-1-1009. In the event the nonprofit corporation no longer qualifies for such status, then the employee exemption from having a mortgage loan originator license shall no longer be applicable; or

(19) Any person who purchases or holds closed mortgage loans for the sole purpose of securitization into a secondary market, provided that such person holds the individual loans for less than seven days.

(b) Exemptions enumerated in paragraphs (1), (2), (2.1), (7), (8), (9), (11), (12), (13), (14), (15), (16), and (17) of subsection (a) of this Code section shall be exemptions from licensure as a mortgage broker or mortgage lender only. Nothing in paragraphs (1), (2), (2.1), (7), (8), (9), (11), (12), (13), (14), (15), (16), and (17) of subsection (a) of this Code section shall be intended to exempt natural persons from compliance with mortgage loan originator licensing requirements as set forth in this article and the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. Individuals that transact business as a mortgage loan originator, unless specifically exempted by paragraph (3), (4), (5), (6), (10), or (18) of subsection (a) of this Code section, shall obtain a mortgage loan originator license as required by Code Section 7-1-1002 whether they are employed by a mortgage broker, mortgage lender, or person exempted as a mortgage broker or lender as set forth in this subsection.

(c) A licensed mortgage lender is authorized to engage in all activities that are authorized for a mortgage broker and, as a result, shall not be required to obtain a mortgage broker license.

(d) Any violation of this article or the rules and regulations of the department by a natural person exempted pursuant to paragraph (17) of subsection (a) of this Code section shall be deemed to be a violation by both the licensee and the exempt natural person for purposes of the enforcement provisions of this article.

1 15 U.S.C.A. §§ 78m and 78o.

§ 7-1-1001.1

(a) It shall be prohibited for any person to engage in the activities of a mortgage loan originator without first obtaining and maintaining a mortgage loan originator license as set forth in this article.

(b) The department shall have the broad administrative authority to administer, interpret, and enforce this article and the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008, and promulgate rules or regulations implementing it, in order to carry out the intentions of the federal legislation. Such administrative authority of the department shall include, but shall not be limited to, the authority to promulgate rules and regulations to implement the provisions of such federal legislation related to the temporary authority of mortgage loan originators.

(c) The provisions of the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 shall apply to the activities of retail sellers of manufactured homes to the extent determined by the United States Department of Housing and Urban Development through written guidelines, rules, regulations, or interpretive letters.

§ 7-1-1002

(a) It shall be prohibited for any person to transact business in this state directly or indirectly as a mortgage broker, a mortgage lender, or a mortgage loan originator unless such person:

(1) Is licensed or registered as such by the department utilizing the Nationwide Multistate Licensing System and Registry;

(2) Is exempted from the licensing or registration requirements pursuant to Code Section 7-1-1001;

(3) In the case of an employee of a mortgage broker or mortgage lender, has qualified to be relieved of the necessity for a license under the employee exemption in paragraph (14) of subsection (a) of Code Section 7-1-1001; or

(4) In the case of a mortgage loan originator, is supervised by a mortgage broker, mortgage lender, or exemptee on a daily basis while performing mortgage functions; is employed by and works exclusively for only one mortgage broker, mortgage lender, or exemptee; and is paid on a W-2 basis by the employing mortgage broker, mortgage lender, or exemptee, except those natural persons exempt from licensure as a mortgage broker or mortgage lender under paragraph (17) of subsection (a) of Code Section 7-1-1001. Each licensed mortgage loan originator shall register with and maintain a valid unique identifier issued by the Nationwide Multistate Licensing System and Registry. For the purposes of implementing an orderly and efficient mortgage loan originator process, the department may establish licensing rules or regulations and interim procedures for licensing and acceptance of applications.

(a.1) A loan processor or underwriter who is an independent contractor shall not engage in the activities of a loan processor or underwriter unless such independent contractor loan processor or underwriter obtains and maintains a mortgage broker or mortgage lender license. Each independent contractor loan processor or underwriter licensed as a mortgage broker or mortgage lender shall have and maintain a valid unique identifier issued by the Nationwide Multistate Licensing System and Registry.

(b) It shall be prohibited for any person, as defined in Code Section 7-1-1000, to purchase, sell, or transfer one or more mortgage loans or loan applications from or to a mortgage loan originator, mortgage broker, or mortgage lender who is neither licensed nor exempt from the licensing or registration provisions of this article. Such a purchase shall not affect the obligation of the borrower under the terms of the mortgage loan. The department shall provide for distribution or availability of information regarding approved or revoked licenses.

(c) Every person who directly or indirectly controls a person who violates subsection (a), (a.1), or (b) of this Code section, every general partner, executive officer, joint venturer, or director of such person, and every person occupying a similar status or performing similar functions as such person violates with and to the same extent as such person, unless the person whose violation arises under this subsection sustains the burden of proof that he or she did not know and, in the exercise of reasonable care, could not have known of the existence of the facts by reason of which the original violation is alleged to exist.

§ 7-1-1003

(a) An application for a license under this article shall be made in writing, under oath, and in such form as the department may prescribe. Each such form shall contain content as set forth by rule, regulation, instruction, or procedure of the department and may be changed or updated as necessary by the department in order to carry out the purposes of this article. The department, by regulation, may prescribe different classes of licenses for mortgage loan originators, mortgage brokers, and mortgage lenders.

(b) The application shall include the following:

(1) The legal name and address of the applicant and, if the applicant is a partnership, association, corporation, or other business entity, of every member, officer, and director thereof;

(2) All names, including, but not limited to, website domain names (URLs), under which the applicant will conduct business in Georgia;

(3) For mortgage brokers and mortgage lenders, the address of the main office or principal place of business where books and records are located and any other locations at which the applicant will engage in any business activity covered by the provisions of this article, together with the mailing address where the department shall send all correspondence, orders, or notices. Any changes in this mailing address shall be delivered in writing to the department before the change is effective;

(4) For mortgage brokers and mortgage lenders, the complete name and address of the applicant's initial registered agent and registered office for service of process in Georgia. If the applicant is a Georgia corporation, this registered agent shall be the same as the agent recorded with the Secretary of State. Any changes in the registered agent or registered office shall be delivered in writing to the department and the Secretary of State, if applicable, before the change is effective. The registered agent may, but is not required to, be an officer of the applicant, and the registered office shall be a Georgia location where the registered agent may be served;

(5) For mortgage brokers and mortgage lenders, the general plan and character of the business;

(6) For mortgage brokers and mortgage lenders, a financial statement of the applicant;

(7) For mortgage brokers and mortgage lenders, such other data, financial statements, and pertinent information as the department may require with respect to the applicant, its directors, trustees, officers, members, agents, or ultimate equitable owners of 10 percent or more of the applicant; and

(8) For mortgage brokers and mortgage loan originators, evidence of satisfaction of experience or education requirements, as required by regulations of the department.

(1) Investigation and supervision fees established by regulation;

(2) The items required by Code Section 7-1-1003.2; and

(3) Other information as may be required by the department.

§ 7-1-1003.2

(a) Each licensed or registered mortgage broker shall provide the department with a bond. The bond for a mortgage broker shall be in the principal sum of $150,000.00 or such greater sum as the department may require as set forth by regulation based on an amount that reflects the dollar amount of loans originated, and the bond shall meet the other requirements of subsection (d) of this Code section.

(b) Except as otherwise provided in subsection (d) of this Code section, the department shall not license or register any mortgage lender unless the applicant or registrant provides the department with a bond. The bond for a mortgage lender shall be in the principal sum of $250,000.00 or such greater sum as the department may require as set forth by regulation based on an amount that reflects the dollar amount of loans originated, and which bond shall meet the other requirements of subsection (d) of this Code section.

(c) Each mortgage loan originator shall be covered by the surety bond of his or her sponsoring licensed or registered mortgage broker or lender. In the event that the mortgage loan originator is an employee of a licensed or registered mortgage broker or lender or under an exclusive written independent contractor agreement as described in paragraph (17) of Code Section 7-1-1001, the surety bond of such licensed or registered mortgage broker or lender may be used in lieu of the mortgage loan originator's surety bond requirement.

(d) General bond requirements:

(1) The bond requirements for mortgage loan originators, mortgage brokers, and mortgage lenders are continuous in nature and shall be maintained at all times as a condition of licensure;

(2) The corporate surety bond shall be for a term and in a form satisfactory to the department, shall be issued by a bonding company or insurance company authorized to do business in this state and approved by the department, and shall run to the State of Georgia for the benefit of any person damaged by noncompliance of a licensee with this article, the “Georgia Residential Mortgage Act,” or with any condition of such bond. Damages under the bond shall include moneys owed to the department for fees, fines, or penalties. Such bond shall be continuously maintained thereafter in full force. Such bond shall be conditioned upon the applicant or the licensee conducting his or her licensed business in conformity with this article and all applicable laws;

(3) When an action is commenced on a licensee's bond, the department may require the filing of a new bond; and

(4) Immediately upon recovery upon any action on the bond, the licensee shall file a new bond.

(e) Any person including the department who may be damaged by noncompliance of a licensee with any condition of a bond or this article, the “Georgia Residential Mortgage Act,” may proceed on such bond against the principal or surety thereon, or both, to recover damages.

§ 7-1-1003.3

An application to register as a mortgage lender or broker under this article shall be made annually in writing, under oath, on a form provided by the department, subject to requirements specified by rules and regulations of the department.

§ 7-1-1003.5

(a) The department is authorized to:

(3) Request that the Nationwide Multistate Licensing System and Registry adopt an appropriate privacy, data security, and security breach notification policy that is in full compliance with existing state and federal law;

(4) Disclose or cause to be disclosed without liability via the Nationwide Multistate Licensing System and Registry applicant and licensee information, including, but not limited to, violations of this article and enforcement actions to facilitate regulatory oversight of mortgage loan originators, mortgage brokers, and mortgage lenders across state jurisdictional lines;

(5) Establish and adopt, by rule or regulation, requirements for participation by applicants and licensees in the Nationwide Multistate Licensing System and Registry upon the department's determination that each new or amended requirement is consistent with both the public interest and the purposes of this article; and

(6) Pay all fees received from licensees and applicants related to applications, licenses, and renewals to the Office of the State Treasurer; provided, however, that the department may net such fees to recover the cost of participation in the Nationwide Multistate Licensing System and Registry.

(b) Irrespective of its participation in the Nationwide Multistate Licensing System and Registry, the department retains full and exclusive authority over determinations whether to grant, renew, suspend, or revoke licenses issued to mortgage loan originators, mortgage brokers, and mortgage lenders under this article. Nothing in this Code section shall be construed to reduce this authority.

§ 7-1-1003.6

(a) Except as otherwise provided in the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 1, the requirements under any federal law or Georgia state law regarding the privacy or confidentiality of any information or material provided to the Nationwide Multistate Licensing System and Registry and any privilege arising under federal or state law, including the rules of any federal or state court, with respect to such information or material, shall continue to apply to such information or material after the information or material has been disclosed to the Nationwide Multistate Licensing System and Registry. Such information and material may be shared with all state and federal regulatory agencies or law enforcement authorities without the loss of privilege or the loss of confidentiality protection provided by federal or state law.

(b) Information or material that is subject to privilege or confidentiality under subsection (a) of this Code section shall not be subject to:

(1) Disclosure under any federal or state law governing the disclosure to the public of information held by an officer or an agency of the federal government or the respective state; or

(2) Subpoena or discovery, or admission into evidence, in any private civil action unless with respect to any privilege held by the Nationwide Multistate Licensing System and Registry regarding such information or material, the person to whom such information or material pertains waives, in whole or in part, in the discretion of such person that privilege.

(c) This Code section shall not apply with respect to the information or material relating to the employment history of, and publicly adjudicated disciplinary and enforcement actions against, licensees that are included in the Nationwide Multistate Licensing System and Registry for access by the public.

1 12 USCA § 5101 et seq.

§ 7-1-1003.7

(a) Any education provider which offers mortgage industry related courses designed to satisfy education requirements as provided in subsection (d) of Code Section 7-1-1004 and associated department rules shall be approved by the department.

(b) An application under this Code section shall be made in writing, under oath, and in such form as the department may prescribe. The application shall include the following:

(1) The name and address of the applicant and, if the entity is not a sole proprietorship, the name of every member, officer, principal, or director thereof;

(2) The name under which the applicant will conduct business in Georgia;

(3) A proposed certificate program or course of study which lists each subject to be taught and credit or classroom hours for each course designed to satisfy education requirements;

(4) Qualifications and credentials of any and all instructors teaching courses named in paragraph (3) of this subsection; and

(5) Other information as may be required by the department.

(c) The initial application shall be filed with the department along with fees established by rule, no portion of which shall be refunded or prorated. Upon receipt of an application, the department shall conduct such investigation as it deems necessary to determine that the applicant and the individuals who direct the affairs or establish policy for the applicant, including the officers, directors, or the equivalent, are of good character and ethical reputation; that the applicant and such persons meet the requirements of subsection (i) of Code Section 7-1-1004; that the applicant and such persons demonstrate reasonable financial responsibility; that the applicant has and maintains a registered agent for service in this state; and that the applicant and such persons are qualified by education and experience to present courses directly related to the mortgage brokering process.

(d) All education providers approved under this Code section shall be required to file a renewal application on an annual basis in writing, under oath, and in such a form as the department may prescribe. A fee established by the department shall be paid with each renewal application, which fee shall not be refunded or prorated. Failure to file a renewal application shall result in the education provider being removed from the department list of approved mortgage education providers.

(e) The department may audit or investigate course offerings of the applicant or approved mortgage education provider as it deems necessary and without cost to the department.

§ 7-1-1004

(b) Upon receipt of an application for license or registration, the department shall conduct such investigation as it deems necessary to determine that the mortgage broker and mortgage lender applicant and the individuals who direct the affairs or establish policy for the mortgage broker and mortgage lender applicant, including the officers, directors, or the equivalent, are of good character and ethical reputation; that the mortgage broker and mortgage lender applicant is not disqualified for licensure as a result of adverse administrative civil or criminal findings in any jurisdiction; that the mortgage broker and mortgage lender applicant and such persons meet the requirements of subsection (i) of this Code section; that the mortgage broker and mortgage lender applicant and such persons demonstrate reasonable financial responsibility; that the mortgage broker and mortgage lender applicant has reasonable policies and procedures to receive and process customer grievances and inquiries promptly and fairly; and that the mortgage broker and mortgage lender applicant has and maintains a registered agent for service in this state.

(c) The department shall not license or register any mortgage broker and mortgage lender applicant unless it is satisfied that the mortgage broker and mortgage lender applicant may be expected to operate its mortgage lending or brokerage activities in compliance with the laws of this state and in a manner which protects the contractual and property rights of the citizens of this state.

(d) The department may establish by rule or regulation minimum education or experience requirements for an applicant for a mortgage broker license or renewal of such a license.

(e) Upon receipt of an application for a mortgage loan originator license, the department shall conduct such investigation as it deems necessary to determine that the mortgage loan originator applicant:

(1) Has never had a mortgage loan originator license revoked in any governmental jurisdiction, except that a subsequent formal vacation of such revocation shall not be deemed a revocation;

(2) Has not been convicted of, or pleaded guilty or nolo contendere to, a felony in a domestic, foreign, or military court; provided, however, that any pardon of a conviction shall not be a conviction for purposes of this subsection;

(3) Has demonstrated financial responsibility, character, and general fitness such as to command the confidence of the community and to warrant a determination that the mortgage loan originator will operate honestly, fairly, and efficiently within the purposes of this article;

(4) Has completed the prelicensing education requirement described in subsection (f) of this Code section; and

(5) Has passed a written test that meets the test requirement described in subsection (h) of this Code section.

(f)(1) An individual shall complete at least 20 hours of prelicensing education courses reviewed and approved by the Nationwide Multistate Licensing System and Registry based upon reasonable standards. Review and approval of a prelicensing education course shall include review and approval of the course provider. The 20 hours of prelicensing education shall include at least:

(A) Three hours of federal law and regulations;

(B) Three hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues; and

(2) Nothing in this subsection shall preclude any prelicensing education course, as approved by the Nationwide Multistate Licensing System and Registry, that is provided by the employer of the mortgage loan originator applicant or an entity which is affiliated with the applicant by an agency contract, or any subsidiary or affiliate of such employer or entity.

(3) Prelicensing education may be offered either in a classroom, online, or by any other means approved by the Nationwide Multistate Licensing System and Registry.

(4) The prelicensing education requirements approved by the Nationwide Multistate Licensing System and Registry in paragraph (1) of this subsection for any state shall be accepted as credit toward completion of prelicensing education requirements in Georgia.

(5) A person previously licensed under this article applying to be licensed again shall prove that he or she has completed all of the continuing education requirements for the year in which the license was last held.

(6) The department is authorized to enact rules and regulations related to the expiration of prelicensing education.

(g)(1) In order to meet the written test requirement referred to in subsection (e) of this Code section for mortgage loan originators, an individual shall pass, in accordance with the standards established under this subsection, a qualified written test developed by the Nationwide Multistate Licensing System and Registry and administered by a test provider approved by the Nationwide Multistate Licensing System and Registry based upon reasonable standards.

(2) A written test shall not be treated as a qualified written test for purposes of this subsection unless the test adequately measures the applicant's knowledge and comprehension in appropriate subject areas, including:

(A) Ethics;

(B) Federal law and regulation pertaining to mortgage origination;

(D) Federal and state law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues.

(3) Nothing in this subsection shall prohibit a test provider approved by the Nationwide Multistate Licensing System and Registry from providing a test at the location of the employer of the applicant or the location of any subsidiary or affiliate of the employer of the applicant or the location of any entity with which the applicant holds an exclusive arrangement to conduct the business of a mortgage loan originator.

(4)(A) An individual shall not be considered to have passed a qualified written test unless the individual achieves a test score of not less than 75 percent correct answers to questions.

(B) An individual may retake a test three consecutive times with each consecutive taking occurring at least 30 days after the preceding test.

(D) A licensed mortgage loan originator who fails to maintain a valid license for a period of five years or longer shall retake the test, not taking into account any time during which such individual is a registered mortgage loan originator.

(h)(1) In order to meet the annual continuing education requirements referred to in paragraph (2) of subsection (e) of Code Section 7-1-1005, a licensed mortgage loan originator shall complete at least eight hours of education approved in accordance with paragraph (2) of this subsection which shall include at least:

(A) Three hours of federal law and regulations;

(B) Two hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues; and

(2) For purposes of paragraph (1) of this subsection, continuing education courses shall be reviewed and approved by the Nationwide Multistate Licensing System and Registry based upon reasonable standards. Review and approval of a continuing education course shall include review and approval of the course provider.

(3) Nothing in this subsection shall preclude any education course from approval by the Nationwide Multistate Licensing System and Registry that is provided by the employer of the mortgage loan originator or any entity which is affiliated with the mortgage loan originator by an agency contact, or any subsidiary or affiliate of such employer or entity.

(4) Continuing education may be offered either in a classroom, online, or by any other means approved by the Nationwide Multistate Licensing System and Registry.

(5) A licensed mortgage loan originator, except for as provided for in paragraph (9) of this subsection and subsection (g) of Code Section 7-1-1005, shall only receive credit for a continuing education course in the year in which the course is taken and shall not take the same approved course in the same or successive years to meet the annual requirements for continuing education.

(6) A licensed mortgage loan originator who is an approved instructor of an approved continuing education course may receive credit for the licensed mortgage loan originator's own annual continuing education requirement at the rate of two hours of credit for every one hour taught.

(7) An individual having successfully completed the education requirements approved by the Nationwide Multistate Licensing System and Registry in paragraph (1) of this subsection for any state shall be accepted as credit toward completion of continuing education requirements in Georgia.

(8) A licensed mortgage loan originator who subsequently becomes unlicensed shall complete the continuing education requirements for the last year in which the license was held prior to issuance of a new or renewed license or the prelicensing education in the event the prelicensing education has expired pursuant to the rules and regulations of the department.

(9) An individual meeting the requirements of subsection (e) of Code Section 7-1-1005 may make up any deficiency in continuing education as established by rule or regulation of the department.

(i) The department shall not issue or may revoke a license or registration if it finds that the mortgage loan originator, mortgage broker, or mortgage lender applicant or licensee, or any person who is a director, officer, partner, covered employee, or ultimate equitable owner of 10 percent or more of the mortgage broker or mortgage lender applicant, registrant, or licensee or any individual who directs the affairs or establishes policy for the mortgage broker or mortgage lender applicant, registrant, or licensee, has been convicted of a felony in any jurisdiction or of a crime which, if committed within this state, would constitute a felony under the laws of this state. Other than a mortgage loan originator, for the purposes of this article, a person shall be deemed to have been convicted of a crime if such person shall have pleaded guilty or nolo contendere to a charge thereof before a court or federal magistrate or shall have been found guilty thereof by the decision or judgment of a court or federal magistrate or by the verdict of a jury, irrespective of the pronouncement of sentence or the suspension thereof, and regardless of whether first offender treatment without adjudication of guilt pursuant to the charge was entered, or an adjudication or sentence was otherwise withheld or not entered on the charge, unless and until such plea of guilty, or such decision, judgment, or verdict, shall have been set aside, reversed, or otherwise abrogated by lawful judicial process or until probation, sentence, or both probation and sentence of a first offender have been successfully completed and documented, or unless the person convicted of the crime shall have received a pardon therefor from the President of the United States or the Governor or other pardoning authority in the jurisdiction where the conviction occurred. For purposes of this article, a mortgage loan originator shall be deemed to have been convicted of a crime if he or she has pleaded guilty to, been found guilty of, or entered a first offender or nolo contendere plea to a felony in a domestic, foreign, or military court; provided, however, that any pardon of a conviction shall not be a conviction.

(j) The department shall be authorized to obtain conviction data with respect to any mortgage loan originator, mortgage broker, or mortgage lender applicant or any person who is a director, officer, partner, covered employee, or ultimate equitable owner of 10 percent or more of the mortgage broker or mortgage lender applicant and any individual who directs the affairs of the company or establishes policy. Criminal history record checks may be requested by the department through the Georgia Crime Information Center and the Federal Bureau of Investigation. The department shall have the authority to receive the results of such checks. Fees required for a criminal history record check by the Georgia Crime Information Center or the Federal Bureau of Investigation shall be paid by the applicant or licensee.

(k) In connection with an application for licensing with respect to any mortgage loan originator applicant, mortgage broker, or lender applicant, at the direction of the department, the applicant shall, at a minimum, furnish to the Nationwide Multistate Licensing System and Registry information concerning the applicant's identity, including:

(1) Fingerprints for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information for a state, national, and international criminal history background check;

(2) Personal history and experience in a form prescribed by the Nationwide Multistate Licensing System and Registry, including the submission of authorization for the Nationwide Multistate Licensing System and Registry and the department to obtain:

(A) An independent credit report obtained from a consumer reporting agency described in section 603(p) of the Fair Credit Reporting Act, 15 U.S.C. Section 1681a(p); and

(B) Information related to any administrative, civil, or criminal findings by any governmental jurisdiction;

(3) For the purposes set forth in this subsection and in order to reduce the points of contact which the Federal Bureau of Investigation may have to maintain for purposes of such subsection, the department may use the Nationwide Multistate Licensing System and Registry as a channeling agent for requesting information from and distributing information to the Department of Justice or any governmental agency; and

(4) For the purposes of this subsection and in order to reduce the points of contact which the department may have to maintain for purposes of such subsection, the department may use the Nationwide Multistate Licensing System and Registry as a channeling agent for requesting and distributing information to and from any source so directed by the department.

(l) Every mortgage broker and mortgage lender licensee, registrant, and applicant shall be authorized and required to obtain criminal background checks on covered employees. Such criminal background checks shall be commercial background checks. Licensees, registrants, and applicants shall be responsible for any applicable fees charged by the company performing the commercial background check. A licensee, registrant, or applicant may only employ a covered employee whose criminal history has been checked in this manner and has been found to be in compliance with all lawful requirements prior to the initial date of hire. This provision shall not apply to directors, officers, partners, agents, or ultimate equitable owners of 10 percent or more or to persons who direct the company's affairs or establish policy, whose background shall have been investigated through the department before taking office, beginning employment, or securing ownership. The department shall be entitled to review any applicant's, registrant's, or licensee's files to determine whether the required commercial background checks have been conducted and whether all covered employees are qualified. Notwithstanding the requirement that licensees, registrants, and applicants conduct such commercial background checks on covered employees, the department shall retain the right to obtain conviction data on covered employees pursuant to subsection (j) of this Code section.

(m) Upon receipt of fingerprints, fees, and other required information from the department, the Georgia Crime Information Center shall promptly transmit fingerprints to the Federal Bureau of Investigation for a search of bureau records and an appropriate report and shall promptly conduct a search of its own records and records to which it has access. The Georgia Crime Information Center shall notify the department in writing of any derogatory finding, including, but not limited to, any conviction data regarding the fingerprint records check, or if there is no such finding. All conviction data received by the department shall be used by the department for the exclusive purpose of carrying out the responsibilities of this article, shall not be a public record, shall be privileged, and shall not be disclosed to any other person or agency except to any person or agency which otherwise has a legal right to inspect the file. All such records shall be maintained by the department and the applicant or licensee or registrant pursuant to laws regarding such records and the rules and regulations of the Federal Bureau of Investigation and the Georgia Crime Information Center, as applicable.

(n) In connection with an application under this article, the department may use the Nationwide Multistate Licensing System and Registry as a channeling agent for the submission of fingerprints to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information for a state, national, and international criminal history background check and the receipt of such checks by the department.

(o) The department may deny or revoke a license or registration or otherwise restrict a license or registration if it finds that the mortgage broker or mortgage lender applicant or any person who is a director, officer, partner, or ultimate equitable owner of 10 percent or more or person who directs the company's affairs or who establishes policy of the applicant has been in one or more of these roles as a mortgage lender, broker, or registrant whose license or registration has been denied, revoked, or suspended within five years of the date of the application.

(p) The department shall not issue a license or registration to and may revoke a license or registration from a mortgage broker or mortgage lender applicant, licensee, or registrant if such person:

(1) Has been the recipient of a final cease and desist order issued within the preceding five years if such order was based on a violation of subsection (i) of this Code section or Code Section 7-1-1002 or 7-1-1013;

(2) Employs any other person against whom a final cease and desist order has been issued within the preceding five years if such order was based on a violation of subsection (i) of this Code section or Code Section 7-1-1002 or 7-1-1013; or

(3) Has had his or her license revoked within five years of the date such person was hired or employs any other person who has had his or her license revoked within five years of the date such person was hired.

(q) Each mortgage broker and mortgage lender applicant, licensee, and registrant shall, before hiring an employee, examine the department's public records to determine that such employee is not subject to the type of order described in subsection (p) of this Code section.

(r) Within 90 days after receipt of a completed application and payment of licensing fees prescribed by this article, the department shall either grant or deny the request for license or registration.

(s) A person shall not be indemnified for any act covered by this article or for any fine or penalty incurred pursuant to this article as a result of any violation of the law or regulations contained in this article, due to the legal form, corporate structure, or choice of organization of such person, including, but not limited to, a limited liability company.

§ 7-1-1004.1

Each mortgage broker and mortgage lender shall submit to the Nationwide Multistate Licensing System and Registry reports of condition, which shall be in such form and shall contain such information as the department and the Nationwide Multistate Licensing System and Registry may require.

§ 7-1-1004.2

The department shall establish a process whereby licensees may challenge information entered into the Nationwide Multistate Licensing System and Registry by the department.

§ 7-1-1004.3

The unique identifier of any person originating a residential mortgage loan shall be clearly shown on all residential mortgage loan application forms, solicitations, or advertisements, including business cards, websites, and any other documents as established by rule, regulation, or order of the department.

§ 7-1-1005

(a) Except as otherwise specifically provided in this article, all licenses and registrations issued pursuant to this article shall expire on December 31 of each year, and application for renewal shall be made annually on or before December 1 of each year.

(b) Any licensee or registrant making proper application on or before December 1 for the renewal of a license or registration for the following calendar year shall be permitted to continue to operate pending final approval or disapproval of the application if the application for the license or registration is not acted upon prior to January 1. For purposes of this subsection, a “proper application” shall include a requirement that all documentation requesting a renewal has been completed, the requisite continuing education has been successfully obtained, and payment has been made of all outstanding fines and applicable fees required by this article.

(c) No investigation fee shall be payable in connection with the renewal application, but an annual license or registration fee established by regulation of the department to defray the cost of supervision shall be paid with each renewal application, which fee shall not be refunded.

(d) Any person holding a license or registration pursuant to this article who fails to file a proper application for a license or registration renewal for the following license year on or before December 1 and who files an application after December 1 may be required to pay, in addition to the license or registration fees, a fine in an amount to be established by regulations promulgated by the department.

(e) The minimum standards for license renewal for mortgage loan originators shall include:

(1) The mortgage loan originator continues to meet the minimum standards for license issuance;

(2) The mortgage loan originator has satisfied the annual continuing education requirements;

(3) The mortgage loan originator has paid all required fees for renewal of the license; and

(4) The mortgage loan originator is in compliance with any and all written orders issued by the department.

(f) A mortgage loan originator license shall become inactive in the event that the mortgage loan originator is no longer sponsored by a mortgage lender or mortgage broker that is licensed. A mortgage loan originator shall not act as a mortgage loan originator in this state while the license is inactive. A mortgage loan originator license shall remain in inactive status until the license expires pursuant to subsection (a) of this Code section, the licensee surrenders the license, the license is revoked or suspended, or the licensee obtains sponsorship.

(g) The department may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the Nationwide Multistate Licensing System and Registry.

§ 7-1-1006

(a) Each license issued under this article shall state the name of the licensee.

(b) A licensee shall post a copy of such license in a conspicuous place in each place of business of the licensee.

(d) No licensee shall transact business under any name or names other than those designated in the records of the department.

(e) For mortgage brokers and mortgage lenders, each licensee shall notify the department in writing of any change in the address of the principal place of business or of any additional location of business in Georgia, any change in registered agent or registered office, any change of executive officer or contact person for consumer complaints, or of any material change in the licensee's financial statement. Notice of changes shall be received by the department no later than 30 business days after the change is effective.

(f) No mortgage broker or mortgage lender shall open a new additional office in Georgia without prior approval of the department. Applications for such additional office shall be made in writing on a form prescribed by the department and shall be accompanied by payment of a $350.00 nonrefundable application fee. The application shall be approved unless the department finds that the applicant has not conducted business under this article efficiently, fairly, in the public interest, and in accordance with law. The application shall be deemed approved if notice to the contrary has not been mailed by the department to the applicant within 45 days of the date the application is received by the department.

(g) All branch managers in Georgia shall be approved by the department. A mortgage broker or mortgage lender may place a new branch manager subject to the department's approval but shall file for approval within 15 days of the placement and shall remove the person immediately should the department deny approval.

§ 7-1-1007

(a) A licensee shall give written notice to the department of any action which may be brought against it by any creditor or borrower where such action is brought under this article, involves a claim against the bond filed with the department for the purposes of compliance with Code Section 7-1-1003.2 or 7-1-1004, or involves a claim for damages in excess of $25,000.00 for a mortgage broker or mortgage loan originator and $250,000.00 for a lender and of any judgment which may be entered against it by any creditor or any borrower or prospective borrower, with details sufficient to identify the action or judgment, within 30 days after the commencement of any such action or the entry of any such judgment.

(b) A corporate surety shall, within ten days after it pays any claim to any claimant, give notice to the department by registered or certified mail or statutory overnight delivery of such payment with details sufficient to identify the claimant and the claim or judgment so paid. Whenever the principal sum of such bond is reduced by one or more recoveries or payments thereon, the mortgage loan originator, mortgage broker, or mortgage lender shall furnish a new or additional bond so that the total or aggregate principal sum of such bond or bonds shall equal the sum required under Code Section 7-1-1003.2 or 7-1-1004 or shall furnish an endorsement duly executed by the corporate surety reinstating the bond to the required principal sum thereof.

(c) A bond filed with the department for the purpose of compliance with Code Section 7-1-1003.2 or 7-1-1004 shall not be canceled by either the mortgage loan originator, mortgage broker, or mortgage lender or the corporate surety except upon notice to the department electronically through the Nationwide Multistate Licensing System and Registry, the cancellation to be effective not less than 30 days after receipt by the department of such notice and only with respect to any breach of condition occurring after the effective date of such cancellation.

(d) A licensee or registrant shall, within ten days after knowledge of the event, report in writing to the department:

(1) Any knowledge or discovery of an act prohibited by Code Section 7-1-1013;

(2) The discharge of any employee for dishonest or fraudulent acts; and

(3) Any administrative, civil, or criminal action initiated against the licensee, registrant, or any of its control persons by any government entity.

Any person reporting such an event shall be protected from civil liability as provided in Code Section 7-1-1009.

§ 7-1-1008

(a) Except as provided in this Code section, no person shall acquire directly or indirectly 10 percent or more of the voting shares of a corporation or 10 percent or more of the ownership of any other entity licensed or registered to conduct business as a mortgage broker or mortgage lender under this article unless it first:

(1) Files an application with the department in such form as the department may prescribe from time to time;

(2) Delivers such other information to the department as the department may require concerning the financial responsibility, background, experience, and activities of the applicant, its directors and officers, if a corporation, and its members, if applicable, and of any proposed new directors, officers, or members of the licensee or registrant; and

(3) Pays such application fee as the department may prescribe.

(b) Upon the filing and investigation of an application, the department shall permit the applicant to acquire the interest in the mortgage broker or mortgage lender licensee or registrant if it finds that the applicant and its members, if applicable, its directors and officers, if a corporation, and any proposed new directors and officers have the financial responsibility, character, reputation, experience, and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law. The department shall grant or deny the application within 60 days from the date a completed application accompanied by the required fee is filed unless the period is extended by order of the department reciting the reasons for the extension. If the application is denied, the department shall notify the applicant of the denial and the reasons for the denial.

(1) The acquisition of an interest in a licensee or registrant directly or indirectly, including an acquisition by merger or consolidation by or with a person licensed or registered by this article or a person exempt from this article under Code Section 7-1-1001;

(2) The acquisition of an interest in a mortgage broker or mortgage lender licensee or registrant directly or indirectly, including an acquisition by merger or consolidation by or with a person affiliated through common ownership with the licensee or registrant; or

(3) The acquisition of an interest in a mortgage broker or mortgage lender licensee or registrant by a person by bequest, descent, or survivorship or by operation of law.

The person acquiring an interest in a mortgage broker or mortgage lender licensee or registrant in a transaction which is exempt from filing an application by this subsection shall send written notice to the department of such acquisition within 30 days of the closing of such transaction.

§ 7-1-1009

(a) Mortgage brokers and mortgage lenders required to be licensed or registered under this article shall maintain at their offices or such other location as the department shall permit such books, accounts, and records as the department may reasonably require in order to determine whether such mortgage brokers and mortgage lenders are complying with the provisions of this article and rules and regulations adopted in furtherance thereof. Such books, accounts, and records shall be maintained separately and distinctly from any other personal or unrelated business matters in which the mortgage brokers and mortgage lenders are involved.

(b) The department shall investigate and examine the affairs, business, premises, and records of any mortgage broker or mortgage lender required to be licensed or registered under this article insofar as such affairs, business, premises, and records pertain to any business for which a license or registration is required by this article. The department may conduct such investigations and examinations as often as it deems necessary in order to carry out the purposes of this article, but shall conduct such investigations and examinations at least once every 60 months. In order to avoid unnecessary duplication of examinations, the department may accept examination reports performed and produced by other state or federal agencies, unless the department determines that the examinations are not available or do not provide the information necessary to fulfill the responsibilities of the department under this article. Notwithstanding the provisions of this subsection, the department may alter the frequency or scope of investigations and examinations through rules and regulations prescribed by the department. If the department determines, based on the records submitted to the department and past history of operations of the licensee in the state, that such investigations or examinations are unnecessary, then the department may waive such investigations and examinations. In the case of registrants, the department shall not be required to conduct such examinations if it determines that the registrant has been adequately examined by another bank regulatory agency.

(c) In addition to any authority allowed under this article, the department shall be authorized to conduct investigations and examinations of mortgage loan originators as follows:

(1) For purposes of initial licensing, license renewal, license suspension, license conditioning, license revocation or termination, or general or specific inquiry or investigation to determine compliance with this article, the department shall have the authority to access, receive, and use any books, accounts, records, files, documents, information, or evidence, including, but not limited to:

(A) Criminal, civil, and administrative history information, including nonconviction data;

(B) Personal history and experience information, including independent credit reports obtained from a consumer reporting agency described in section 603(p) of the Fair Credit Reporting Act, 15 U.S.C. Section 1681a(f); and

(C) Any other documents, information, or evidence the department deems relevant to the inquiry or investigation regardless of the location, possession, control, or custody of such documents, information, or evidence;

(2) For the purposes of investigating violations or complaints, or for the purposes of examination, the department may review, investigate, or examine any mortgage loan originator licensee, individual, or person subject to this article as often as necessary in order to carry out the purposes of this article. The department may direct, subpoena, or order the attendance of and examine under oath all persons whose testimony may be required about the loans or the business or subject matter of any such examination or investigation and may direct, subpoena, or order such person to produce books, accounts, records, files, and any other documents the department deems relevant to the inquiry;

(3) Each mortgage loan originator licensee, individual, or person subject to this article shall make available to the department upon request the books and records relating to the activities of a mortgage loan originator;

(4) Each mortgage loan originator subject to this article shall make or compile reports or prepare other information as directed by the commissioner in order to carry out the purposes of this subsection, including, but not limited to:

(A) Accounting compilations;

(B) Information lists and data concerning loan transactions in a format prescribed by the department; or

(C) Use, hire, contract, or employ public or privately available analytical systems, methods, or software to examine or investigate a mortgage loan originator;

(5) In making any examination or investigation authorized by this article, the department may control access to any documents and records of the licensee or person under investigation. In order to carry out the purposes of this Code section, the department may:

(A) Enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information, or evidence obtained under this Code section;

(B) Accept and rely on examination or investigation reports made by other government officials, within or without this state; and

(C) Accept audit reports made by an independent certified public accountant for the licensee, individual, or person subject to this article in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of examination, report of investigation, or other writing of the department;

(6) The authority to investigate provided for in this subsection shall remain in effect whether such licensee, individual, or person subject to this article acts or claims to act under any licensing or registration law of this state or claims to act without such authority; and

(7) No mortgage loan originator licensee, individual, or person subject to investigation or examination under this article shall knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records, or other information.

(d) The department, at its discretion, may:

(1) Make such public or private investigations within or outside of this state as it deems necessary to determine whether any person has violated or is about to violate this article or any rule, regulation, or order under this article, to aid in the enforcement of this article, or to assist in the prescribing of rules and regulations pursuant to this article;

(2) Require or permit any person to file a statement in writing, under oath or otherwise as the department determines, as to all the facts and circumstances concerning the matter to be investigated;

(3) Disclose information concerning any violation of this article or any rule, regulation, or order under this article, provided the information is derived from a final order of the department;

(4) Disclose the imposition of an administrative fine or penalty under this article; and

(5) Conduct an on-site examination without prior notice, with the licensee or registrant to pay the reasonably incurred costs for such examination, including out-of-state travel expenses, and the department shall be authorized to net such out-of-state expenses against the payments from the licensee or registrant.

(e)(1) For the purpose of conducting any investigation as provided in this Code section, the department shall have the power to administer oaths, to call any party to testify under oath in the course of such investigations, to require the attendance of witnesses, to require the production of books, records, and papers, and to take the depositions of witnesses; and for such purposes, the department is authorized to issue a subpoena for any witness or for the production of documentary evidence. Such subpoenas may be served by certified mail or statutory overnight delivery, return receipt requested, to the addressee's business mailing address, by examiners appointed by the department, or shall be directed for service to the sheriff of the county where such witness resides or is found or where the person in custody of any books, records, or paper resides or is found. The required fees and mileage of the sheriff, witness, or person shall be paid from the funds in the state treasury for the use of the department in the same manner that other expenses of the department are paid.

(2) The department may issue and apply to enforce subpoenas in this state at the request of a government agency regulating mortgage lenders or brokers of another state if the activities constituting the alleged violation for which the information is sought would be a violation of this article if the activities had occurred in this state.

(f) In case of refusal to obey a subpoena issued under this article to any person, a superior court of appropriate jurisdiction, upon application by the department, may issue to the person an order requiring him or her to appear before the court to show cause why he or she should not be held in contempt for refusal to obey the subpoena. Failure to obey a subpoena may be punished as contempt by the court.

(g) Examinations and investigations conducted under this article and information obtained by the department in the course of its duties under this article are confidential, except as provided in this subsection, pursuant to the provisions of Code Section 7-1-70. In addition to the exceptions set forth in subsection (b) of Code Section 7-1-70 and in paragraphs (3) and (4) of subsection (d) of this Code section, the department is authorized to share information obtained under this article with other state and federal regulatory agencies or law enforcement authorities. In the case of such sharing, the safeguards to confidentiality already in place within such agencies or authorities shall be deemed adequate. The commissioner or an examiner specifically designated may disclose such limited information as is necessary to conduct a civil or administrative investigation or proceeding. Information contained in the records of the department which is not confidential and may be made available to the public either on the department's website, upon receipt by the department of a written request, or in the Nationwide Multistate Licensing System and Registry shall include:

(1) For mortgage brokers and mortgage lenders, the name, business address, and telephone, facsimile, and unique identifier of a licensee or registrant;

(2) For mortgage brokers and mortgage lenders, the names and titles of the principal officers;

(3) For mortgage brokers and mortgage lenders, the name of the owner or owners thereof;

(4) For mortgage brokers and mortgage lenders, the business address of a licensee's or registrant's agent for service; and

(5) The terms of or a copy of any bond filed by a licensee or registrant.

(h) In the absence of malice, fraud, or bad faith, a person shall not be subject to civil liability arising from the filing of a complaint with the department or furnishing other information required by this Code section or required by the department under the authority granted in this article. No civil cause of action of any nature shall arise against such person:

(1) For any information relating to suspected prohibited acts furnished to or received from law enforcement officials, their agents, or employees or to or from other regulatory or licensing authorities;

(2) For any such information furnished to or received from other persons subject to the provisions of this title; or

(3) For any such information furnished in complaints filed with the department.

(i) The commissioner or any employee or agent shall not be subject to civil liability, and no civil cause of action of any nature exists against such persons arising out of the performance of activities or duties under this article or by publication of any report of activities under this Code section.

§ 7-1-1010

(a) If a mortgage broker is a United States Department of Housing and Urban Development loan correspondent, such broker shall also submit to the department the audit that is required for the United States Department of Housing and Urban Development. The department may require the mortgage broker to have made an audit of the books and affairs of the licensed or registered business and submit to the department an audited financial statement if the department finds that such an audit is necessary to determine whether the mortgage broker is complying with the provisions of this article and the rules and regulations adopted in furtherance of this article.

(b) Each mortgage lender licensed or registered under this article shall at least once each year have made an audit of the books and affairs of the licensed or registered business and submit to the department at renewal an audited financial statement, except that a mortgage lender licensed or registered under this article which is a subsidiary shall comply with this provision by annually providing a consolidated audited financial statement of its parent company and a financial statement, which may be unaudited, of the licensee or registrant which is prepared in accordance with generally accepted accounting principles. A lender who utilizes a bond in lieu of an audit need not supply such audit, unless specially required by the department. An audit shall be less than 15 months old to be acceptable. The department may by regulation establish additional minimum standards for audits and reports under this Code section.

§ 7-1-1011

(a) The department may, by regulation, prescribe annual fees to be paid by licensees and registrants, which fees shall be set at levels necessary to defray costs and expenses incurred by the state in providing the examinations and supervision required by this article and its federally mandated participation in the Nationwide Multistate Licensing System and Registry, and which fees may vary according to whether a person is a licensee or registrant or is a mortgage loan originator, mortgage broker, or a mortgage lender.

(b)(1) As used in this subsection, the term “collecting agent” means the person listed as the secured party on a security deed or other loan document that establishes a lien on the residential real property taken as collateral at the time of the closing of the mortgage loan transaction.

(2) There shall be imposed on the closing of every mortgage loan subject to regulation under this article which, as defined in Code Section 7-1-1000, includes all mortgage loans, whether or not closed by a mortgage broker or mortgage lender licensee or registrant, a fee of $10.00. The fee shall be paid by the borrower to the collecting agent at the time of closing of the mortgage loan transaction. The collecting agent shall remit the fee to the department at the time and in the manner specified by regulation of the department. Revenue collected by the department pursuant to this subsection shall be deposited in the general fund of the state.

(3) The fee imposed by this subsection shall be a debt from the borrower to the collecting agent until such assessment is paid and shall be recoverable at law in the same manner as authorized for the recovery of other debts. Any collecting agent who neglects, fails, or refuses to collect the fee imposed by this subsection shall be liable for the payment of the fee.

§ 7-1-1012

Without limitation on the power conferred by Article 1 of this chapter, the department may make reasonable rules and regulations, not inconsistent with law, for the enforcement of this article, to effectuate the purposes of this article, and to clarify the meaning of terms.

§ 7-1-1013

It shall be prohibited for any person transacting a mortgage business in or from this state, including any person required to be licensed or registered under this article and any person exempted from the licensing or registration requirements of this article under Code Section 7-1-1001, to:

(1) Misrepresent the material facts, make false statements or promises, or submit false statements or documents likely to influence, persuade, or induce an applicant for a mortgage loan, a mortgagee, or a mortgagor to take a mortgage loan, or, through agents or otherwise, pursue a course of misrepresentation by use of fraudulent or unauthorized documents or other means to the department or anyone;

(2) Misrepresent or conceal or cause another to misrepresent or conceal material factors, terms, or conditions of a transaction to which a mortgage lender or broker is a party, pertinent to an applicant or application for a mortgage loan or a mortgagor;

(3) Fail to disburse funds in accordance with a written commitment or agreement to make a mortgage loan;

(4) Improperly refuse to issue a satisfaction of a mortgage loan;

(5) Fail to account for or deliver to any person any personal property obtained in connection with a mortgage loan such as money, funds, deposit, check, draft, mortgage, or other document or thing of value which has come into the possession of a licensee or registrant and which is not the property of the licensee or registrant, or which the mortgage lender or broker is not in law or at equity entitled to retain;

(6) Engage in any transaction, practice, or course of business which is not in good faith or fair dealing, or which operates a fraud upon any person, in connection with the attempted or actual making of, purchase of, transfer of, or sale of any mortgage loan;

(7) Engage in any fraudulent home mortgage underwriting practices;

(8) Induce, require, or otherwise permit the applicant for a mortgage loan or mortgagor to sign a security deed, note, loan application, or other pertinent financial disclosure documents with any blank spaces to be filled in after it has been signed, except blank spaces relating to recording or other incidental information not available at the time of signing;

(9) Make, directly or indirectly, any residential mortgage loan with the intent to foreclose on the borrower's property. For purposes of this paragraph, there shall be a presumption that a person has made a residential mortgage loan with the intent to foreclose on the borrower's property if the following circumstances can be demonstrated:

(A) Lack of substantial benefit to the borrower;

(B) Lack of probability of full payment of the loan by the borrower; and

(10) Provide an extension of credit or collect a mortgage debt by extortionate means; or

(11) Purposely withhold, delete, destroy, or alter information requested by an examiner of the department or make false statements or material misrepresentations to the department or the Nationwide Multistate Licensing System and Registry or in connection with any investigation conducted by the department or another governmental agency.

§ 7-1-1014

In addition to such other rules, regulations, and policies as the department may promulgate to effectuate the purposes of this article, the department shall promulgate regulations governing the disclosure required to be made to applicants for mortgage loans, including, without limitation, the following requirements:

(1) Any person required to be licensed or registered under this article shall provide to each applicant for a mortgage loan prior to accepting an application fee or any third-party fee such as a property appraisal fee, credit report fee, or any other similar fee a disclosure of the fees payable and the conditions under which such fees may be refundable;

(2) Any mortgage lender required to be licensed or registered under this article shall make available to each applicant for a mortgage loan at or before the time a commitment to make a mortgage loan is given a written disclosure of the fees to be paid in connection with the commitment and the loan, or the manner in which such fees shall be determined and the conditions under which such fees may be refundable; and

(3) Any mortgage lender required to be licensed or registered under this article shall disclose to each borrower of a mortgage loan that failure to meet every condition of the mortgage loan may result in the loss of the borrower's property through foreclosure. The borrower shall be required to sign the disclosure at or before the time of the closing of the mortgage loan.

The department may prescribe standards regarding the accuracy of required disclosures and may provide for applicable administrative or civil penalties or fines for failure to provide the disclosures or to meet the prescribed standards.

§ 7-1-1015

The department may promulgate rules with respect to the placement in escrow accounts by any person required to be licensed or registered by this article of any money, fund, deposit, check, or draft entrusted to it by any persons dealing with it as a residential mortgage loan originator, mortgage broker, mortgage lender, or servicer.

§ 7-1-1016

In addition to such other rules, regulations, and policies as the department may promulgate to effectuate the purpose of this article, the department shall prescribe regulations governing the advertising of mortgage loans, including, without limitation, the following requirements:

(1)(A) Advertisements for loans regulated under this article shall not be false, misleading, or deceptive. No person whose activities are regulated under this article shall advertise in any manner so as to indicate or imply that its interest rates or charges for loans are in any way “recommended,” “approved,” “set,” or “established” by the state or this article.

(B) An advertisement shall not include an individual's loan number, loan amount, or other publicly available information unless it is clearly and conspicuously stated in boldface type at the beginning of the advertisement that the person disseminating it is not authorized by, in sponsorship with, or otherwise affiliated with the individual's lender, which shall be identified by name. Such an advertisement shall also state that the loan information contained therein was not provided by the recipient's lender; and

(2) All advertisements, including websites, disseminated by a licensee or a registrant in this state by any means shall contain the name, which shall conform to a name on record with the department, and unique identifier, which shall clearly indicate that the number was issued by the Nationwide Multistate Licensing System and Registry, of the licensee or registrant.

§ 7-1-1017

(a)(1) The department may suspend or revoke an original or renewal license, registration, or mortgage broker education approval on any ground on which it might refuse to issue an original license, registration, or approval or for a violation of any provision of this article or of Chapter 6A of this title or any rule or regulation issued under this article or under Chapter 6A of this title, including failure to provide fees on a timely basis, or for failure of the licensee or registrant to pay, within 30 days after it becomes final, a judgment recovered in any court within this state by a claimant or creditor in an action arising out of the licensee's or registrant's business in this state as a mortgage loan originator, mortgage lender, or mortgage broker or for violation of a final order previously issued by the department.

(2) Where an applicant or licensee has been found not in compliance with an order for child support as provided in Code Section 19-6-28.1 or 19-11-9.3, such action shall be sufficient grounds for refusal of a license or suspension of a license. In such actions, the hearing and appeal procedures provided for in those Code sections shall be the only such procedures required under this article. The department shall be permitted to share, without liability, information on its applications or other forms with appropriate state agencies to assist them in recovering child support when required by law.

(3) Where an applicant or licensee has been found to be a borrower in default under the Georgia Higher Education Loan Program as determined by the Georgia Higher Education Assistance Corporation or has been certified by any entity of the federal government for nonpayment or default or breach of a repayment or service obligation under any federal educational loan, loan repayment, or service conditional scholarship program, such action shall not be grounds for refusal of a license or suspension of a license.

(b) Notice of the department's intention to enter an order denying an application for a license or registration under this article or of an order suspending or revoking a license or registration under this article shall be given to the applicant, licensee, or registrant in writing, sent by email to the email address of record for the applicant, licensee, or registrant, or registered or certified mail or statutory overnight delivery addressed to the principal place of business of such applicant, licensee, or registrant. Within 20 days of the date of the notice of intention to enter an order of denial, suspension, or revocation under this article, the applicant, licensee, or registrant may request in writing a hearing to contest the order. If a hearing is not requested in writing within 20 days of the date of such notice of intention, the department shall enter a final order regarding the denial, suspension, or revocation. If a person refuses to accept service of the notice or order by registered or certified mail or statutory overnight delivery and the notice sent by email to the email address of record has not been delivered to the person, the notice or order shall be served by the commissioner or the commissioner's authorized representative under any other method of lawful service; and the person shall be personally liable to the commissioner for a sum equal to the actual costs incurred to serve the notice or order. This liability shall be paid upon notice and demand by the commissioner or the commissioner's representative and shall be assessed and collected in the same manner as other fees or fines administered by the commissioner. Any final order of the department denying, suspending, or revoking a license or registration shall state the grounds upon which it is based and shall be effective on the date of issuance. The department shall promptly send a copy of such order by mail addressed to the principal place of business of such applicant, licensee, or registrant and post a copy of such order on the Nationwide Multistate Licensing System and Registry. For purposes of this subsection, the term “email address of record” means the email address that the applicant, licensee, or registrant has designated as their email address for regulatory contact on file with the Nationwide Multistate Licensing System and Registry.

(c) A licensee or registrant may, at the discretion of and with the consent of the department, agree to a voluntary suspension of its license or registration for a period of time to be agreed upon by the parties. Such order of suspension shall be considered a final order and shall be forwarded to the licensee or registrant in the same manner as any other final order. Grounds for such a voluntary suspension shall be the same as provided in subsection (a) of this Code section, and the licensee or registrant may waive its right to an administrative hearing before issuance of the suspension. With the consent of the department, a licensee or registrant may voluntarily surrender its license or registration. A voluntary surrender of a license or registration shall have the same effect as a revocation of said license or registration. A voluntary surrender of a license shall be regarded as a final order of the department.

(d) A decision of the department denying a license or registration application, original or renewal, shall be conclusive, except that it may be subject to judicial review under Code Section 7-1-90. A decision of the department suspending or revoking a license or registration shall be subject to judicial review in the same manner as a decision of the department to take possession of the assets and business of a bank under Code Section 7-1-155.

(e) Except as otherwise provided by law, a revocation, suspension, or surrender of a license or registration shall not impair or affect the obligation of a preexisting contract between the licensee and another person.

(f) Nothing in this article shall preclude a mortgage broker or mortgage lender whose license or registration has been suspended or revoked from continuing to service mortgage loans pursuant to servicing contracts in existence at the time of the suspension or revocation for a period not to exceed six months after the date of the final order of the department suspending or revoking the license or registration.

(g) Whenever a person subject to an order of the department fails to comply with the terms of such order which has been properly issued, the department upon notice of three days to such person may, through the Attorney General, petition the principal court for an order directing such person to obey the order of the department within the period of time fixed by the court. Upon the filing of such petition, the court shall allow a motion to show cause why such motion should not be granted. Whenever, after a hearing upon the merits or after failure of such person to appear when ordered, it shall appear that the order of the department was properly issued, the court shall grant the petition of the department.

(h) Whenever the department initiates an administrative action against a current licensee or an applicant, the department may pursue that action to its conclusion despite the fact that a licensee may withdraw its license or fail to renew it or an applicant may withdraw its application.

§ 7-1-1018

(a) Whenever it shall appear to the department that any person required to be licensed or registered under this article or employed by a licensee or who would be covered by the prohibitions in Code Section 7-1-1013 has violated any law of this state or any order or regulation of the department, the department may issue an initial written order requiring such person to cease and desist immediately from such unauthorized practices. Such cease and desist order shall be final 20 days after it is issued unless the person to whom it is issued makes a written request within such 20 day period for a hearing. The hearing shall be conducted in accordance with Chapter 13 of Title 50, the “Georgia Administrative Procedure Act.” A cease and desist order to an unlicensed person that orders such person to cease doing a mortgage business without the appropriate license shall be final 30 days from the date of issuance, and there shall be no opportunity for an administrative hearing. If the proper license or evidence of exemption or valid employment status during the time of the alleged offense is delivered to the department within the 30 day period, the order shall be rescinded by the department. If a cease and desist order is issued to a person who has been sent a notice of bond cancellation and if the bond is reinstated or replaced and such documentation is delivered to the department within the 20 day period following the date of issuance of the order, the order shall be rescinded. If the notice of reinstatement of the bond is not received within the 20 days, the license shall expire at the end of the 20 day period, and the person shall be required to make a new application for license and pay the applicable fees. In the case of an unlawful purchase of mortgage loans, such initial cease and desist order to a purchaser shall constitute the knowledge required under subsection (b) of Code Section 7-1-1002 for any subsequent violations. Any cease and desist order sent to the person at both his or her personal and business addresses pursuant to this Code section that is returned to the department as “refused” or “unclaimed” shall be deemed as received and sufficiently served.

(b) Whenever a person shall fail to comply with the terms of an order of the department which has been properly issued under the circumstances, the department, upon notice of three days to such person, may, through the Attorney General, petition the principal court for an order directing such person to obey the order of the department within the period of time as shall be fixed by the court. Upon the filing of such petition, the court shall allow a motion to show cause why it should not be granted. Whenever, after a hearing upon the merits or after failure of such person to appear when ordered, it shall appear that the order of the department was properly issued, the court shall grant the petition of the department.

(c) Any person who violates the terms of any order issued pursuant to this Code section shall be liable for a civil penalty not to exceed $1,000.00 per violation per day unless otherwise agreed to by the department. In determining the amount of penalty, the department shall take into account the appropriateness of the penalty relative to the size of the financial resources of such person, the good faith efforts of such person to comply with the order, the gravity of the violation, the history of previous violations by such person, and such other factors or circumstances as shall have contributed to the violation. The department may at its discretion compromise, modify, or refund any penalty which is subject to imposition or has been imposed pursuant to this Code section. Any person assessed as provided in this subsection shall have the right to request a hearing into the matter within ten days after notification of the assessment has been served upon the person involved; otherwise, such penalty shall be final except as to judicial review as provided in Code Section 7-1-90.

(d) Initial judicial review of the decision of the department entered pursuant to this Code section or Code Section 7-1-1017 shall be available solely in the superior court of the county of domicile of the department.

(e) All penalties and fines recovered by the department as authorized by subsection (g) of this Code section shall be paid into the state treasury to the credit of the general fund; provided, however, that the department at its discretion may remit such amounts recovered, net of the cost of recovery, if it makes an accounting of all such costs and expenses of recovery in the same manner as prescribed for judgments received through derivative actions pursuant to the provisions of Code Section 7-1-441.

(f) For purposes of this Code section, the term “person” also includes any officer, director, employee, agent, or other person participating in the conduct of the affairs of the person subject to the orders issued pursuant to this Code section.

(g) In addition to any other administrative penalties authorized by this article, the department may, by regulation, prescribe administrative fines for violations of this article and of any rules promulgated by the department pursuant to this article.

§ 7-1-1019

Any person and the several members, officers, directors, agents, and employees thereof who:

(1) Shall violate the provisions of subsection (a) or (a.1) of Code Section 7-1-1002, by the willful transaction of a mortgage business without a license or exemption, shall be guilty of a felony punishable as provided in Code Section 7-1-845; or

(2) Shall violate any of the other provisions of this article shall be guilty of a misdemeanor and shall be punished by imprisonment for not more than one year or by a fine of not more than $1,000.00, or by both fine and imprisonment.

§ 7-1-1020

Nothing in this article shall limit any statutory or common law right of any person to bring any action in any court for any act involved in the mortgage business or the right of the state to punish any person for any violation of any law. Without limiting the generality of the foregoing, nothing in this article shall be construed as limiting in any manner the application of Part 2 of Article 15 of Chapter 1 of Title 10, the “Fair Business Practices Act of 1975.”

§ 7-1-1021

The department may promulgate regulations governing the use and contents of lock-in agreements and commitment agreements.

§ 7-1-1100

As used in this article, the term:

(1) “Affiliate” has the meaning assigned by 12 U.S.C. Section 1841(k) of the Bank Holding Company Act.

(2) “Agency,” when used in reference to an office of a foreign bank, has the meaning assigned by 12 U.S.C. Section 3101(1) of the International Banking Act.

(3) “Bank” has the meaning assigned by 12 U.S.C. Section 1841(c) of the Bank Holding Company Act, except that the term does not include a foreign bank or a branch or agency of a foreign bank.

(4) “Bank supervisory agency” means any of the following:

(A) An agency of another state with primary responsibility for chartering and supervising banks; or

(B) The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, or the Board of Governors of the Federal Reserve System, and any successor to these agencies.

(5) “Branch,” when used in reference to an office of a foreign bank, has the meaning assigned by 12 U.S.C. Section 3101(3) of the International Banking Act.

(6) “Commissioner” means the commissioner of banking and finance.

(7) “Control” has the meaning assigned by 12 U.S.C. Section 1841(a) of the Bank Holding Company Act, and regulations and interpretive rulings of the Board of Governors of the Federal Reserve System.

(8) “Department” means the Department of Banking and Finance.

(9) “Deposit” has the meaning assigned by 12 U.S.C. Section 1813(l) of the Federal Deposit Insurance Act.

(10) “Depository institution” means an institution included for any purpose within the definition of insured depository institution as assigned by 12 U.S.C. Section 1813(c)(2) of the Federal Deposit Insurance Act.

(11) “Federal agency” means an agency of a foreign bank that is licensed by the Comptroller of the Currency pursuant to 12 U.S.C. Section 3102 of the International Banking Act.

(12) “Federal branch” means a branch of a foreign bank that is licensed by the Comptroller of the Currency pursuant to 12 U.S.C. Section 3102 of the International Banking Act.

(13) “Foreign bank” has the meaning assigned by 12 U.S.C. Section 3101(7) of the International Banking Act.

(14) “Functional regulatory agency” means a department or agency of this state, another state, the United States, or a foreign government that regulates and charters, licenses, or registers persons engaged in financial activities or activities incidental or complementary to financial activities, including activities related to banking, insurance, or securities.

(15) “Georgia state agency” means, when used in reference to an office of a foreign bank, an agency of a foreign bank that is located in this state and licensed pursuant to this article.

(16) “Georgia state bank” means a bank that is organized under the laws of the State of Georgia.

(17) “Georgia state branch” means, when used in reference to an office of a foreign bank, a branch of a foreign bank that is located in this state and licensed pursuant to this article.

(18) “Georgia state representative office” means, when used in reference to an office of a foreign bank, a representative office that is located in this state and registered pursuant to this article.

(19) “Home state” means the state determined to be the home state of the foreign bank under 12 U.S.C. Section 3103(c) of the International Banking Act.

(20) “Insolvency” means:

(A) Inability to meet liabilities as they become due in the regular course of business; or

(B) Insufficiency in actual cash market value of assets to pay liabilities to depositors and other creditors.

(21) “International Banking Act” means the federal International Banking Act of 1978, 12 U.S.C. Section 3101, et seq.

(22) “Interstate Banking and Branching Efficiency Act” means the federal Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, Public Law No. 103-328, codified and subsequently amended at various sections of Title 12, United States Code.

(23) “Interstate branch” means a branch of a bank or a branch of a foreign bank, as the context requires, established, acquired, or retained pursuant to the Interstate Banking and Branching Efficiency Act, outside the home state of the bank or foreign bank.

(24) “National bank” means a national banking association organized pursuant to 12 U.S.C. Sections 21 through 215c or a federal savings association organized pursuant to 12 U.S.C. Sections 1461-1470.

(25) “Office of a foreign bank” means a branch, agency, or representative office operated by a foreign bank.

(26) “Out-of-state foreign bank” means a foreign bank whose home state is another state.

(27) “Representative office,” when used in reference to an office of a foreign bank, has the meaning assigned by 12 U.S.C. Section 3101(15) of the International Banking Act.

(28) “State” means a state of the United States.

(29) “State bank” means a Georgia state bank or an out-of-state state bank, including an out-of-state state savings bank.

(30) “Subsidiary” has the meaning assigned by 12 U.S.C. Section 1841(d) of the Bank Holding Company Act.

(31) “United States” means:

(A) When used in a geographical sense, the several states, the District of Columbia, Puerto Rico, Guam, American Samoa, the American Virgin Islands, the Trust Territory of the Pacific Islands, and other territories of the United States; and

(B) When used in a political sense, the federal government of the United States.

§ 7-1-1101

(a) A foreign bank may not engage in business in this state except to the extent permitted by this article.

(b) Unless subject to an order to cease and desist under Code Section 7-1-1108, the following activities of a foreign bank shall not be considered engaging in business in this state for purposes of subsection (a) of this Code section and, therefore, such subsection shall not prohibit a foreign bank:

(1) From engaging in business at a licensed federal branch or federal agency in this state in accordance with federal law;

(2) That does not maintain a branch or agency in this state or conduct business from a location in this state from making unsecured loans in this state or loans secured by liens on real or personal property located in this state or enforcing those loans in this state, to the extent permitted by other law; or

(3) Organized under the laws of a territory of the United States the deposits of which are insured by the Federal Deposit Insurance Corporation from establishing and operating an interstate branch in this state in its capacity as a state bank pursuant to Part 20 of Article 2 of this chapter.

(d) For purposes of subsection (a) of this Code section, a foreign bank is not considered to be engaging in business in this state merely because a subsidiary or affiliate engages in business in this state, including business that a depository institution subsidiary or affiliate may lawfully conduct in this state as an agent for the foreign bank, to the extent authorized by the laws of this state.

§ 7-1-1102

Each Georgia state branch, Georgia state agency, or Georgia state representative office shall maintain and make available appropriate books, accounts, and records reflecting:

(1) All transactions effected by or on behalf of the office of the foreign bank; and

(2) All other actions taken in this state by employees of the foreign bank located in this state to effect transactions on behalf of an office of the foreign bank located outside this state.

§ 7-1-1103

(a) The department may make examinations of a Georgia state branch, Georgia state agency, or Georgia state representative office as the department considers necessary to determine whether the office of the foreign bank is being operated in compliance with the laws of this state and in accordance with safe and sound banking practices. Such examinations shall be conducted in the same manner as examinations for financial institutions pursuant to Code Section 7-1-64.

(b) A foreign bank that maintains a Georgia state branch, Georgia state agency, or Georgia state representative office shall pay fees for licensing, registration, assessment, and examination to the department in accordance with this article and rules or regulations adopted pursuant to this article.

§ 7-1-1104

(a) A foreign bank operating in this state through a Georgia state branch, Georgia state agency, or Georgia state representative office shall make written reports to the department that:

(1) Are in English;

(2) Are submitted at the times and in the form specified by the department;

(3) Are under oath of one of the foreign bank's officers, managers, or agents located at a branch, agency, or representative office in this state;

(4) Show the amount of the foreign bank's assets and liabilities, expressed in United States currency;

(5) With respect to a Georgia state branch or Georgia state agency, show the amount of the branch or agency's assets and liabilities, expressed in United States currency; and

(6) Contain other information that the department requires.

(b) A license or registration of a foreign bank under this article may be revoked, or the foreign bank may be subject to an order to cease and desist under Code Section 7-1-1108, if the foreign bank fails to make a report required under subsection (a) of this Code section or makes a material misrepresentation in such report.

§ 7-1-1105

A foreign bank that operates a Georgia state branch, Georgia state agency, or Georgia state representative office shall inform the department in writing of the direct or indirect acquisition of control of the foreign bank by any person or entity, or group of persons or entities acting in concert, within 14 calendar days after such change in control. Such foreign bank shall provide to the department any additional information the department may require in connection with such change in control.

§ 7-1-1106

(a) Except as otherwise provided by the International Banking Act, other applicable federal laws or regulations, other applicable state laws or regulations, or otherwise determined by the department, the operations of a foreign bank at a Georgia state branch, a Georgia state agency, or a Georgia state representative office shall be conducted with the same rights and privileges and subject to the same duties, restrictions, penalties, liabilities, conditions, and limitations that would apply if the Georgia state branch, Georgia state agency, or Georgia state representative office were operated by a Georgia state bank operating at the same location.

(b) Notwithstanding subsection (a) of this Code section, a Georgia state branch, Georgia state agency, or Georgia state representative office shall not have greater rights than afforded a Georgia state bank under applicable state and federal laws.

§ 7-1-1107

(a) For purposes of this Code section, offices of foreign banks in this state shall be divided into classes and ranked in descending order as a:

(1) Georgia state branch;

(2) Georgia state agency; and

(3) Georgia state representative office.

(b) A foreign bank may change a lower class office into a higher class office by applying for the higher class office pursuant to Code Section 7-1-1111. On approval of the application to establish the higher class office and after all conditions to the approval have been satisfied, the foreign bank may change the lower class office into the higher class office, and the department shall issue a license authorizing the bank to maintain the higher class office. Upon issuance of the license for the higher class office, the license or registration previously issued by the department in connection with the lower class office shall be deemed surrendered and rescinded.

(c) A foreign bank may change a higher class office into a lower class office by applying for approval to close the higher class office pursuant to Code Section 7-1-1125. On approval of the application to close the higher class office and after conditions precedent to the closing have been satisfied, the foreign bank may change the higher class office into the lower class office, and the department shall issue a license or registration authorizing the bank to maintain the lower class office. Upon issuance of the license or registration for the lower class office, the license or registration previously issued by the department in connection with the higher class office shall be deemed surrendered and rescinded.

§ 7-1-1108

(a) The department may issue an order requiring a foreign bank to cease and desist immediately from unauthorized activities whenever it shall appear to the department that:

(1) A foreign bank is operating outside the scope of the authority granted by its license or registration;

(2) The foreign bank is operating in an unsafe or unsound manner;

(3) The foreign bank has violated any law of this state or any order or regulation of the department; or

(4) The foreign bank is directly or indirectly engaged in activities in violation of any law of this state or any order or regulation of the department.

Such cease and desist order shall be final 20 days after it is issued unless the foreign bank to whom it is issued makes a written request within such 20 day period for a hearing.

(b) Such cease and desist order shall be in writing, sent via email to the foreign bank at the email address provided to the department by such foreign bank for receipt of notifications and as is on record with the department. Any cease and desist order sent to a foreign bank at its email address that is returned to the department as “undeliverable” or to a foreign bank that has not provided an email address to the department shall be served by the department under any other method of lawful service.

(c) Any hearing authorized under subsection (a) of this Code section shall be conducted in accordance with Chapter 13 of Title 50, the “Georgia Administrative Procedure Act.”

(d) If a foreign bank shall fail to comply with the terms of a final order or decision of the department issued pursuant to this article, the department may, through the Attorney General and upon notice of three days to such foreign bank, petition the court of the county in which the foreign bank has conducted operations for an order directing such foreign bank to obey the order of the department within the period of time as shall be fixed by the court. Upon the filing of such petition, the court shall allow a motion to show cause why it should not be granted. After a hearing upon the merits or after failure of such foreign bank to appear when ordered, the court shall grant the petition of the department upon a finding that the order of the department was properly issued.

(e) Any foreign bank that violates the terms of any final order or decision issued pursuant to this article shall be liable for a civil penalty not to exceed $10,000.00. Each day the violation continues shall constitute a separate offense. In determining the amount of penalty, the department shall take into account the appropriateness of the penalty relative to the size of the financial resources of such foreign bank, the good faith efforts of such foreign bank to comply with the order, the gravity of the violation, the history of previous violations by such foreign bank, and such other factors or circumstances that contributed to the violation. The department may at its discretion compromise or modify any penalty which is subject to imposition or has been imposed pursuant to this Code section. Any foreign bank assessed as provided in this subsection shall have the right to request a hearing into the matter within ten days after notification of the assessment has been served upon the licensee involved; otherwise, such penalty shall be final except as to judicial review as provided in Code Section 7-1-90.

(f) Judicial review of any final order or decision of the department entered pursuant to this article shall be available solely in the Superior Court of DeKalb County, where the department's main office is located.

§ 7-1-1109

Without limiting the power conferred by this title, the department may make reasonable rules and regulations, not inconsistent with law, for the interpretation and enforcement of this article, including, but not limited to, prescribing administrative fines for violations of this article and of any rules promulgated by the department pursuant to this article.

§ 7-1-1110

Except as provided in Code Sections 7-1-1109, 7-1-1112, 7-1-1127, and 7-1-1135, a foreign bank operating in this state at a branch, agency, or representative office shall be subject to service of process at such location.

§ 7-1-1111

(a) A foreign bank that desires to establish and maintain a Georgia state branch or Georgia state agency shall submit an application to the department. Such application shall:

(1) Be accompanied by all application fees and commitments for the pledge of assets required by this article and applicable rules and regulations;

(2) Be in the form specified by the department;

(3) Be signed and acknowledged by an officer of the foreign bank;

(4) Have attached a complete copy of the foreign bank's notice or application to the Board of Governors of the Federal Reserve System under 12 U.S.C. Section 3105(d) of the International Banking Act for the same Georgia state branch or Georgia state agency location and, when issued, the order from the Board of Governors approving the application or acknowledging its nonobjection;

(5) Be submitted simultaneously with the federal notice or application to the Board of Governors of the Federal Reserve System; and

(6) Include on its face or in accompanying documents:

(A) The name of the foreign bank;

(B) The street and mailing address where the principal office of the Georgia state branch or Georgia state agency is to be located, and the name of the person who shall be in charge of the business and affairs of the Georgia state branch or Georgia state agency;

(D) The managerial resources of the foreign bank, including the competence, experience, and integrity of the officers and directors, the integrity of its principal shareholders, and management's experience and capacity to engage in international banking;

(E) The competence, experience, and integrity of the natural person who shall be in charge of the business and affairs of the Georgia state branch or Georgia state agency;

(F) A detailed, audited statement of the foreign bank's financial condition as of a date not more than 360 days before the date of the application;

(G) An email address at which the foreign bank can receive official communications, including, but not limited to, administrative orders; and

(H) Other information that is requested by the department.

(b) The department may adopt rules and regulations prescribing abbreviated application procedures and standards applicable to applications by foreign banks to establish additional Georgia state branches or Georgia state agencies that have already established an initial Georgia state branch or Georgia state agency.

§ 7-1-1112

(a) After the application is complete and accepted for filing and all required fees and deposits have been paid, the department shall determine from the application and initial investigation whether the conditions set forth by Code Section 7-1-1113 have been established. The department shall approve the application or give the applicant notice of the department's intention to deny the application pursuant to subsection (c) of this Code section.

(b) If the department intends to deny the application, the department shall notify the Board of Governors of the Federal Reserve System that a notice of intent to deny has been issued and the applicant has a right to request a hearing and, if a hearing is requested, the commissioner shall conduct the hearing in accordance with Chapter 13 of Title 50, the “Georgia Administrative Procedure Act.”

(c) Notice of the department's intention to enter an order denying an application for a license shall be given to the applicant in writing, sent by email to the email address provided on the application or registered or certified mail or statutory overnight delivery addressed to the mailing address provided on the application. Within 20 days of the date of the notice of intention to enter an order of denial under this article, the applicant may request in writing a hearing to contest the order. If a hearing is not requested in writing within 20 days of the date of such notice of intention, the department shall enter a final order regarding the denial. Any final order of the department denying an application shall state the grounds upon which it is based and shall be effective on the date of issuance. The department shall promptly send a copy of such order by email to the foreign bank.

(d) Information relating to the financial condition and business affairs of the foreign bank and financial information relating to its management and shareholders, except for previously published statements and information, is confidential and may not be considered in the public portion of the hearing or disclosed by the commissioner or the department except as provided by Code Section 7-1-70.

(e) The commissioner shall make a finding from the record of the hearing on each condition listed in Code Section 7-1-1113 and enter an order granting or denying the license. If the license is denied, the commissioner shall inform the Board of Governors of the Federal Reserve System of the order and the reasons the federal application should be denied.

(f) The commissioner may include conditions in the approval of any license application. The commissioner may not issue a license until the Georgia state branch or Georgia state agency has received the approval of the Board of Governors of the Federal Reserve System. If the approval is conditioned on a written commitment from the applicant offered to and accepted by the commissioner, the commitment is enforceable against the applicant.

(g) A final decision by the department denying an application for license shall be subject to review in accordance with Code Section 50-13-19.

§ 7-1-1113

(a) The department shall not issue a license to a foreign bank to establish and maintain a Georgia state branch or Georgia state agency unless the department determines that:

(1) The foreign bank engages directly in the business of banking outside of the United States and the Board of Governors of the Federal Reserve System has concluded the foreign bank is subject to comprehensive supervision or regulation on a consolidated basis by the appropriate authorities in its home country or determined that comprehensive supervision or regulation is not required but the foreign bank's application is otherwise subject to approval;

(2) The foreign bank has furnished to the department the information it needs to act on the application;

(3) The appropriate authorities in the home country of the foreign bank have consented to the proposed establishment of a branch or agency in the United States by the foreign bank;

(4) The managerial resources of the foreign bank, including the foreign bank's experience and capacity to engage in international banking, are sufficient to enable the Georgia state branch or Georgia state agency to operate in accordance with safe and sound banking practices;

(5) The foreign bank has provided the department with adequate assurances that the bank will make available to the department such information on the operations or activities of the foreign bank and any affiliate of the bank that the department deems necessary to determine and enforce compliance with state law, the International Banking Act, and other applicable federal law;

(6) The foreign bank is in compliance with applicable federal and state law;

(7) The financial resources of the foreign bank, including the foreign bank's capital position, projected capital position, profitability, level of indebtedness, and future prospects, are sufficient to enable the Georgia state branch or Georgia state agency to operate in accordance with safe and sound banking practices;

(8) The directors, executive officers, and principal shareholders of the foreign bank are qualified by reason of their financial ability, reputation, and integrity and have sufficient banking and other business experience to indicate that they will manage and direct the affairs of the foreign bank in accordance with safe and sound banking practices;

(9) The natural person who shall be in charge of the business and affairs of the Georgia state branch or Georgia state agency is of sufficient banking experience, ability, standing, competence, trustworthiness, and integrity to justify a belief that the Georgia state branch or Georgia state agency will operate in compliance with state law, the International Banking Act, and other applicable federal law;

(10) Federal law permits the appropriate bank supervisory agency to issue a comparable license to the foreign bank;

(11) The foreign bank has sufficient standing to justify a belief that the Georgia state branch or Georgia state agency will be free from improper or unlawful influence or interference with respect to the operation of the Georgia state branch or Georgia state agency in compliance with state law; and

(12) The foreign bank is acting in good faith and the application does not contain a material misrepresentation.

(b) A license issued under this article is not transferable or assignable.

§ 7-1-1114

(a) After the department has issued a license permitting a foreign bank to establish and maintain a Georgia state branch or Georgia state agency, the foreign bank shall obtain a certificate of authority from the Secretary of State pursuant to Code Section 14-2-1501. The foreign bank shall provide the certificate of authority to the department prior to commencing operations of a Georgia state branch or Georgia state agency.

(b) A foreign bank shall notify the department within three business days if its certificate of authority is revoked by the Secretary of State.

(c) Notwithstanding the definition of the term “foreign corporation” in paragraph (13) of Code Section 14-2-140, all of the provisions of Article 15 of Chapter 2 of Title 14, relating to foreign corporations, shall apply to all foreign banks establishing and maintaining a Georgia state branch or Georgia state agency in this state.

§ 7-1-1115

(a) A foreign bank licensed under this article to establish and maintain a Georgia state branch or Georgia state agency shall not concurrently maintain a federal branch or federal agency in this state.

(b) A foreign bank which maintains a federal branch or federal agency in this state shall not concurrently be licensed under this article to maintain a Georgia state branch or Georgia state agency.

§ 7-1-1116

(a) A Georgia state branch or Georgia state agency is subject to this article and other laws of this state applicable to banks as if the Georgia state branch or Georgia state agency were a Georgia state bank unless:

(1) This chapter, a rule or regulation of the department, or federal law provides otherwise; or

(2) The context of a provision or other information indicates that such provision shall apply only to a bank organized under the laws of a state or the United States.

(b) Among other exceptions to subsection (a) of this Code section that may be required or authorized by the department, provided by this article, or by adopted rules or regulations:

(1) A Georgia state branch may only accept deposits subject to the limitations and requirements established by applicable federal law, including, but not limited to, 12 U.S.C. Section 3104 and 12 C.F.R. 28.16;

(2) A Georgia state agency may not accept deposits; and

(3) A limitation or restriction based on the capital and surplus of a Georgia state bank is considered to refer, as applied to a Georgia state branch or Georgia state agency, to the dollar equivalent of the capital and surplus of the foreign bank.

(c) Subject to subsections (a) and (b) of this Code section, a foreign bank licensed to transact business in this state through a Georgia state branch or Georgia state agency may:

(1) Borrow and lend money with or without property as security;

(2) Purchase, sell, and make loans regardless of whether the loans are secured by bond or mortgages on real property;

(3) Engage in foreign exchange transactions;

(4) Issue, advise, confirm, and otherwise deal with a letter of credit and pay, accept, or negotiate a draft drawn under a letter of credit;

(5) Accept a bill of exchange or draft;

(6) Buy or acquire and sell or dispose of a bill of exchange, draft, note, acceptance, or other obligation for the payment of money;

(7) Maintain a credit balance of money received at the Georgia state branch or Georgia state agency incidental to or arising out of the exercise of its authorized activities in this state, provided that the money is not intended to be a deposit and does not remain in the Georgia state branch or Georgia state agency after the completion of all transactions to which it relates;

(8) Accept deposits to the extent permitted by subsection (b) of this Code section;

(9) Receive money for transmission and transmit the money from its authorized place of business in this state to any other place without the need for a license under Article 4 of this chapter;

(10) Act as an indenture trustee or as a registrar, paying agent, or transfer agent, on behalf of the issuer, for equity or investment securities;

(11) Subject to the prior approval of the department in accordance with Code Section 7-1-1117, act as a fiduciary; and

(12) Perform other activities that:

(A) Are authorized by the rules and regulations adopted to accomplish the purposes of this article;

(B) Are authorized for federal branches of foreign banks, subject to compliance with any related federal conditions or limitations and subject to the notice and objection procedures set forth in Code Section 7-1-296; or

(C) The department determines are analogous or incidental to specific activities authorized by this Code section for a Georgia state branch or Georgia state agency.

(d) A foreign bank licensed to transact business in this state through a Georgia state branch or Georgia state agency may share the premises of the Georgia state branch or Georgia state agency with another authorized office of the foreign bank or direct or indirect subsidiary of the foreign bank, provided that the books or records of the Georgia state branch or Georgia state agency are maintained separately from the books and records of the other office of the foreign bank.

§ 7-1-1117

(a) Except as provided in paragraph (10) of subsection (c) of Code Section 7-1-1116, a foreign bank may not act as a fiduciary at a Georgia state branch or Georgia state agency except by obtaining approval from the department as provided in this Code section. No Georgia state branch or Georgia state agency shall exercise the powers and privileges of a fiduciary without submitting an application to do so in a manner and form prescribed by the department. At a minimum, the application shall describe in detail:

(1) The proposed fiduciary activities;

(2) The names and relevant expertise of its officers and employees who will conduct the fiduciary activities; and

(3) The manner in which the fiduciary activities will be captured in the books and records of the Georgia state branch or Georgia state agency with due regard for separation of beneficial and legal interests.

The department shall evaluate the application in the same manner as for a license as provided in Code Section 7-1-1113.

(b) The department may approve a foreign bank applicant to engage in fiduciary activities if the commissioner finds that the foreign bank will exercise its fiduciary powers in accordance with the laws of this state and has sufficient fiduciary and accounting expertise and controls to protect beneficial interests under its control. The department may include conditions and limitations in any approval of fiduciary powers. If the approval is conditioned on a written commitment from the applicant offered to and accepted by the commissioner, the commitment is enforceable against the applicant. If the department, in its discretion, disapproves the proposed use of fiduciary powers, it shall notify the foreign bank of its disapproval and state generally the unfavorable factors influencing its decision. The decision of the department shall be conclusive, except that it may be subject to judicial review as provided in Code Section 7-1-90.

(c) Notwithstanding the limitations in Article 15 of Chapter 12 of Title 53, a foreign bank that obtains the approval of the department under this Code section may engage in fiduciary activities at its Georgia state branch or Georgia state agency to the same extent and in the same manner as a Georgia state bank could do so at the same location, subject to any conditions or limitations applicable to the approval.

(d) The department may initiate an enforcement action or may order a foreign bank to cease engaging in fiduciary activities in this state in the same manner as a cease and desist order under Code Section 7-1-1108 if the department finds in writing that:

(1) Conditions exist related to the fiduciary activities of the foreign bank in this state which would authorize the department to revoke its license pursuant to Code Section 7-1-1126; or

(2) A fact or condition exists which, if it had existed at the time of the foreign bank's original application to engage in fiduciary activities, would have resulted in the department disapproving the foreign bank to engage in fiduciary activities.

§ 7-1-1118

(a) A foreign bank licensed to establish and maintain a Georgia state branch or Georgia state agency shall apply to the department for an amended license if it changes its corporate name, changes the duration of its corporate existence, or desires to pursue in this state other or additional purposes than those set forth in its prior application for the foreign bank's license then in effect.

(b) The requirements with respect to the form and contents of an application under subsection (a) of this Code section, the manner of its execution, the issuance of an amended license, and the effect of the amended license shall be the same as in the case of an initial application for a license to establish and maintain a Georgia state branch or Georgia state agency.

§ 7-1-1119

(a) For purposes of this Code section, the term “relocation” means the location of an existing Georgia state branch or Georgia state agency is to be moved to a new location which is to be constructed, purchased, or leased within the State of Georgia.

(b) A foreign bank may submit a letter form application to the department to relocate an existing Georgia state branch or Georgia state agency. Unless the department denies the application, the approval to relocate an existing Georgia state branch or Georgia state agency under this Code section shall be effective at the earlier of:

(1) The date of an approval letter from the department; or

(2) Ten business days following the date of the department's acknowledged receipt of the application.

(c) At least 30 days before the relocation, a foreign bank shall post a notice to consumers of such proposed relocation in a conspicuous location at the affected Georgia state branch or Georgia state agency and on its website.

§ 7-1-1120

Each foreign bank licensed to establish and maintain a Georgia state branch or Georgia state agency in this state shall keep the assets of its business in this state separate and apart from the assets of its business outside this state.

§ 7-1-1121

Each foreign bank licensed to establish and maintain a Georgia state branch or Georgia state agency shall give clear and conspicuous notice consistent with 12 C.F.R. 347.207 that deposits and credit balances in the Georgia state branch or Georgia state agency are not insured by the Federal Deposit Insurance Corporation.

§ 7-1-1122

A foreign bank with an out-of-state branch or agency may, with the approval of the department, establish:

(1) A Georgia state branch or Georgia state agency;

(2) Acquire or merge with another foreign bank maintaining a Georgia state branch or Georgia state agency and after the acquisition or merger continue the operations as its own; or

(3) Acquire or establish a Georgia state branch or Georgia state agency through another means not inconsistent with 12 U.S.C. Section 3102 of the International Banking Act.

§ 7-1-1123

(a) A foreign bank licensed to establish and maintain a Georgia state branch or Georgia state agency shall be required to keep dollar deposits or investment securities, with unaffiliated banks in this state that the foreign bank designates and the department approves, or money and securities pledged to the department in an aggregate amount to be determined by the department, valued at the lower of principal amount or market value, consisting of:

(1) United States dollar deposits;

(2) Bonds, notes, debentures, or other legally created, general obligations of a state, an agency or political subdivision of a state, the United States, or an instrumentality of the United States;

(3) Securities that this state, an agency or political subdivision of this state, the United States, or an instrumentality of the United States has unconditionally agreed to purchase, insure, or guarantee;

(4) Certificates of deposit, payable in the United States, and banker's acceptances, provided that, in either case, the issuer has an adequate capacity to meet financial commitments, meaning the risk of default by the obligor is low and the full and timely repayment of principal and interest is expected, for the projected life of the asset or exposure expected;

(5) Repurchase agreements; or

(6) Other assets as may be permitted by rule.

(b) The aggregate amount of deposited investment securities and dollar deposits for each Georgia state branch or Georgia state agency established and operating under this Code section shall be not less than the greater of:

(1) That amount of capital which would be required of a Georgia state bank under Code Section 7-1-410; or

(2) One percent of the total liabilities of such Georgia state branch or Georgia state agency, including acceptances, but excluding accrued expenses and amounts due and other liabilities to offices, branches, agencies, and subsidiaries of such foreign bank.

Notwithstanding the above deposit requirement, the department is authorized to enact rules and regulations pursuant to this article to establish a maximum dollar amount of deposited investment securities and dollar deposits for certain highly rated foreign banks. For prudential or supervisory reasons, the department may require that a foreign bank have deposited investment securities and dollar deposits above the minimum amount.

(c) The assets deposited and the amount of the assets to be maintained under subsection (a) of this Code section are subject to the conditions and limitations the department considers necessary or desirable for the maintenance of a sound financial condition; the protection of depositors, creditors, and the public interest in this state; and the support of public confidence in the business of the Georgia state branch or Georgia state agency.

(d) A foreign bank shall require its depository bank to segregate its dollar deposits and deposited investment securities on the depository bank's books and records. The funds deposited and obligations referred to in subsection (a) of this Code section that are placed in safekeeping at a depository bank:

(1) Shall not be reduced in value below the minimum required for that Georgia state branch or Georgia state agency without the prior approval of the department, but in no event below the minimum amount required under Code Section 7-1-410;

(2) Shall be maintained pursuant to an agreement prescribed by the department that shall be a written agreement entered into with the department; and

(3) Shall be free from any lien, charge, right of setoff, credit, or preference in connection with any claim of the depository bank against the foreign bank.

(e) Each Georgia state branch or Georgia state agency shall file with the department such reports as required by rule or regulation to determine compliance with this Code section.

§ 7-1-1124

(a) The department may require a foreign bank to hold certain assets in this state.

(b) If the department requires asset maintenance, the amount of assets held by a foreign bank shall be prescribed by the department after consideration of the aggregate amount of liabilities of the Georgia state branch or Georgia state agency, payable at or through the Georgia state branch or Georgia state agency. To determine the aggregate amount of liabilities for purposes of this subsection, the foreign bank shall include bankers' acceptances, but exclude liabilities to the head office and any other branches, offices, agencies, subsidiaries, and affiliates of the foreign bank.

(c) In determining compliance with the asset maintenance requirements, the department shall give the Georgia state branch or Georgia state agency credit for:

(1) Assets pledged pursuant to Code Section 7-1-1123; and

(2) Reserves required to be maintained by the Georgia state branch or Georgia state agency pursuant to 12 U.S.C. Section 3105(a).

(d) In determining eligible assets for purposes of this Code section, the Georgia state branch or Georgia state agency shall exclude:

(1) Any amount due from the head office or any other branch, office, agency, subsidiary, or affiliate of the foreign bank;

(2) Any classified asset;

(3) Any asset that, in the determination of the department, is not supported by sufficient credit information;

(4) Any deposit with a bank in the United States, unless that bank has executed a valid waiver of offset agreement;

(5) Any asset not in the actual possession of the Georgia state branch or Georgia state agency, unless the branch or agency holds title to the asset and maintains records sufficient to enable independent verification of the ownership of the asset by the branch or agency, as determined at the most recent examination; and

(6) Any other particular asset or class of assets as provided by the department, based on a case-by-case assessment of the risks associated with the asset.

(e) In the event the department requires asset maintenance, assets to be held in this state for the purpose of satisfying the ratio of assets to liabilities shall:

(1) Include:

(A) Currency, bonds, notes, debentures, drafts, bills of exchange, or other evidences of indebtedness, including loan participation agreements or certificates;

(B) Other obligations payable in the United States or in United States funds or, with the prior approval of the department, in funds freely convertible into United States funds; and

(2) Exclude obligations of a person for money borrowed to the extent that the total of the obligations of the person exceeds 10 percent of total assets considered for purposes of this Code section.

(f) For purposes of this Code section, assets shall be valued at the lower of principal amount or market value. The department may determine the value of a nonmarketable security, loan, or other asset or obligation held or owed to the foreign bank or its Georgia state branch or Georgia state agency in this state. If the department cannot determine the value of a nonmarketable asset, such asset shall be excluded from the ratio computation.

(g) The department may require a foreign bank to deposit the assets required to be held in this state pursuant to this Code section with specific banks in this state designated by the department if, because of the existence or the potential occurrence of unusual and extraordinary circumstances, the department considers it necessary or desirable for the maintenance of a sound financial condition; the protection of depositors, creditors, and the public interest in this state; and the maintenance of public confidence in the business of a Georgia state branch or Georgia state agency.

§ 7-1-1125

(a) A foreign bank licensed to establish and maintain a Georgia state branch or Georgia state agency may not close the Georgia state branch or Georgia state agency without filing an application with, and obtaining the prior approval of, the department. An application by a foreign bank under this Code section shall be in such form and include such information as the department requires.

(b) The commissioner shall approve such application if the department finds that the closing of the Georgia state branch or Georgia state agency will not be substantially detrimental to the foreign bank's depositors and creditors in this state. An application may be approved subject to conditions imposed by the department for the continued protection of the foreign bank's depositors and creditors in this state, including a condition that the foreign bank pledge assets in the manner specified by Code Section 7-1-1123 or maintain assets as contemplated by Code Section 7-1-1124 for a specified period of time.

(c) When an application by a foreign bank under this Code section has been approved and all conditions precedent to the closing have been fulfilled, the foreign bank shall deliver to the department:

(1) All existing copies of examination reports or other property of the department;

(2) A statement under oath by an authorized officer, manager, or agent of the foreign bank that all deposit and other liabilities of the Georgia state branch or Georgia state agency to depositors and creditors in this state have been properly discharged by payment or pledge or otherwise assumed or retained by a financial institution;

(3) An appropriate board resolution closing the Georgia state branch or Georgia state agency; and

(4) A statement of the location where the Georgia state branch or Georgia state agency records will be kept after the closing.

Upon receipt of adequate documentation, the department shall provide written authorization that the foreign bank may close the Georgia state branch or Georgia state agency.

§ 7-1-1126

The department may revoke the license of a Georgia state branch or Georgia state agency if the department by examination or other credible evidence finds that the foreign bank:

(1) Does not currently meet the criteria established by this article for the original issuance of a license;

(2) Has refused to permit the department to examine its books, papers, accounts, records, or affairs in accordance with Code Sections 7-1-1102 and 7-1-1103;

(3) Has failed to make a report required under this article or made a material false or misleading statement in such report;

(4) Has violated this article, another law or rule applicable to a foreign bank or a Georgia state branch or Georgia state agency, or a final and enforceable order of the department;

(5) Has misrepresented or concealed a material fact in the application for licensure;

(6) Has violated a condition of its license or an agreement between the foreign bank and the department or other functional regulatory agency;

(7) Has had its authorization to act dissolved, revoked, or otherwise terminated in its jurisdiction of incorporation or jurisdiction where it is operating a branch, agency, or representative office;

(8) One or more grounds for receivership, including insolvency, as specified in Code Section 7-1-1129, exists; or

(9) Conducts business in an unsafe and unsound manner.

§ 7-1-1127

(a) Notice of the department's intention to enter an order revoking a license of a Georgia state branch or Georgia state agency shall be given to the foreign bank in writing, sent via email to the foreign bank at the email address provided to the department by such foreign bank for receipt of notifications. Within 20 days of the date of issuance of the notice of intention to enter an order of revocation under this article, the foreign bank may request in writing a hearing to contest the order. If a hearing is not requested in writing within 20 days of the date of issuance of such notice of intention, the department shall enter a final order regarding the revocation. A final order of the department revoking a license shall state the grounds upon which it is based and shall be effective on the date of issuance. The department shall promptly send a copy of such order by email to the foreign bank at the email address provided to the department by such foreign bank.

(b) A foreign bank may not accept new business during the pendency of a hearing requested pursuant to subsection (a) of this Code section unless the commissioner gives prior written approval, except that such foreign bank shall comply with any stricter requirements imposed by 12 U.S.C. Section 3105(e) of the International Banking Act.

(c) Information relating to the financial condition and business affairs of the foreign bank, except previously published statements and information, is confidential and shall not be disclosed by the commissioner or an employee of the department except as provided by Code Section 7-1-70.

(d) A decision by the department denying an application for license or of an order revoking a license shall be subject to review in accordance with Code Section 50-13-19.

§ 7-1-1128

Unless stayed by the superior court that has jurisdiction over an appeal under Code Section 50-13-19, a final order of the commissioner revoking a license is effective immediately, and the foreign bank shall immediately cease all activity in this state requiring a license.

§ 7-1-1129

(a) If the department finds that any of the factors set forth in Code Section 7-1-150 or 7-1-1126 are true with respect to a foreign bank licensed to establish and maintain a Georgia state branch or Georgia state agency, the department may by order of the commissioner immediately take possession of the property and business of the foreign bank in this state if that action is necessary or desirable for the protection of the interests of the depositors and creditors of the foreign bank's business in this state or for the protection of the public. The department shall retain possession until the foreign bank resumes business in this state or is finally liquidated, except that the department may permit the foreign bank to resume business in this state on such conditions as the department requires. An order issued under this Code section shall be served on the foreign bank in the manner required by subsection (a) of Code Section 7-1-1127.

(b) As soon as practicable after taking possession of the property and business of a foreign bank pursuant to subsection (a) of this Code section, the department shall initiate a receivership proceeding by filing a copy of the order issued under this Code section in the Superior Court of DeKalb County to be governed by Part 7 of Article 1 of this chapter as if the foreign bank were a Georgia state bank, except as otherwise provided by this Code section. Notwithstanding the priorities established by Part 7 of Article 1 of this chapter, the depositors and creditors of the Georgia state branch or Georgia state agency arising out of transactions with and recorded on the books of the Georgia state branch or Georgia state agency have an absolute preference and priority over the creditors of the foreign bank's offices located outside this state.

(c) An action initiated that seeks to directly or indirectly affect the assets of the Georgia state branch or Georgia state agency is considered to be an intervention in the receivership proceeding. Venue for an action instituted to effect, contest, or otherwise intervene in the liquidation of a Georgia state branch or Georgia state agency is in DeKalb County.

(d) The foreign bank may contest the department's actions as provided in this subsection. On or before the tenth day after the date the department has taken possession of the property and business of a foreign bank pursuant to subsection (a) of this Code section, the foreign bank, acting through a majority of its directors, may intervene in the action filed by the commissioner to challenge the department's closing of the foreign bank's Georgia state branch or Georgia state agency and to enjoin the department or other receiver from liquidating its assets. The court may issue an injunction restraining the department or other receiver from liquidating the foreign bank's assets pending a resolution of the merits of the action. The department or other receiver shall comply with the restraining order but may petition the court for permission to liquidate assets as necessary to prevent their loss or diminution pending the outcome of the injunction. The department or other receiver shall not be required to post bond. The court shall hear such action as quickly as possible and shall give it priority over other business. The foreign bank or the commissioner or other receiver may appeal the court's judgment as in other civil cases, except that the commissioner or other receiver shall retain all seized foreign bank assets pending a final appellate court order even if the commissioner does not prevail in the superior court. If the department prevails in the superior court, liquidation of the assets of the Georgia state branch or Georgia state agency may proceed unless the superior court or appellate court orders otherwise. If liquidation is enjoined or stayed pending appeal, the superior court retains jurisdiction to permit liquidation of assets as necessary to prevent their loss or diminution pending the outcome of the appeal.

(e) After the commissioner or other receiver has completed the liquidation of the property and business of a foreign bank, the commissioner or other receiver shall transfer any remaining assets to the foreign bank in accordance with the court's orders, except that:

(1) If the foreign bank has an office in another state of the United States that is in liquidation and the assets of the office appear to be insufficient to pay in full the creditors of that office, the court shall order the commissioner or other receiver to transfer to the liquidator of that office the amount of the remaining assets that appears to be necessary to cover the insufficiency; or

(2) If the foreign bank has two or more such offices in liquidation and the amount of remaining assets is less than the aggregate amount of insufficiencies with respect to such offices, the court shall order the commissioner or other receiver to distribute the remaining assets among the liquidators of the offices in the manner the court finds equitable.

§ 7-1-1130

(a) If a foreign bank licensed to maintain a Georgia state branch or Georgia state agency in this state is dissolved, has its authority or existence terminated or canceled in the jurisdiction of its incorporation, or has its authority to maintain a Georgia state branch or Georgia state agency terminated by the Board of Governors of the Federal Reserve System under 12 U.S.C. Section 3105(e) of the International Banking Act, an officer, manager, or agent of the foreign bank shall immediately deliver to the department:

(1) A certified copy of:

(A) A certificate of the official responsible for records of banking corporations of the foreign bank's jurisdiction of incorporation attesting to the occurrence of dissolution or of termination or cancellation of its authority or existence;

(B) An order or decree of a court directing the dissolution of the foreign bank or the termination or cancellation of its authority or existence; or

(C) An order of the Board of Governors of the Federal Reserve System terminating its authority under 12 U.S.C. Section 3105(e) of the International Banking Act; and

(2) The documents and information required by subsection (c) of Code Section 7-1-1125.

(b) The filing of the certificate, order, or decree has the same effect provided by Code Section 7-1-1128 as if the license issued under this article were revoked by the department as of the effective date of termination or cancellation specified in the certificate, order, or decree unless the department orders an earlier effective date, subject to the procedural protections of Code Section 7-1-1127.

§ 7-1-1131

(a) A foreign bank may establish a Georgia state representative office upon approval by the department of an application for registration. Such application shall:

(1) Be accompanied by all registration fees required by rule or regulation;

(2) Be in the form specified by the department;

(3) Be signed and acknowledged by an officer of the foreign bank;

(4) Contain as an exhibit or attachment a copy of the foreign bank's notice or application submitted to the Board of Governors of the Federal Reserve System under 12 U.S.C. Section 3107 of the International Banking Act, and, when issued, the order or notification from the Board of Governors indicating that the representative office has been approved, if such notice or application is required;

(5) Be submitted when the federal notice or application is submitted to the Board of Governors of the Federal Reserve System; and

(6) Directly or in exhibits or attachments contain:

(A) The name of the foreign bank;

(B) The street and mailing address where each Georgia state representative office is to be located in this state and the name of the person who shall be in charge of the business and affairs of the Georgia state representative office;

(D) The managerial resources of the foreign bank, including the competence, experience, and integrity of the officers and directors; the integrity of its principal shareholders; and management's experience and capacity to engage in international banking;

(E) A complete and detailed audited statement of the financial condition of the foreign bank as of a date not more than 360 days before the date of the filing; and

(F) Other information the department requires.

(b) Each Georgia state representative office shall submit an annual registration with the department as set forth in the rules and regulations enacted by the department.

(c) The department may adopt rules and regulations prescribing abbreviated registration procedures and standards for foreign banks that have already established an initial Georgia state representative office to establish additional Georgia state representative offices.

(d) A foreign bank that maintains a Georgia state branch, a federal branch, a Georgia state agency, or a federal agency in this state is authorized to establish or maintain one or more Georgia state representative offices.

§ 7-1-1132

A Georgia state representative office may engage in the activities authorized by this article at each location registered with the department as a representative office. A Georgia state representative office may change its location in this state by filing a letter form application with the department containing the street address and mailing address of the new location. Unless the department denies the application, the approval to relocate an existing Georgia state representative office under this Code section will be effective at the earlier of:

(1) The date of an approval letter from the department; or

(2) Ten business days following the date of the department's acknowledged receipt of the application.

All relocations should include a notice to customers posted in a conspicuous place of the affected location as well as on the bank's website at least 30 days before relocating.

§ 7-1-1133

A registered Georgia state representative office of a foreign bank may engage in:

(1) Representational and administrative functions in connection with the banking activities of the foreign bank that:

(A) May include soliciting new business for the foreign bank, conducting research, acting as liaison between the foreign bank's head office and customers in the United States, performing preliminary and servicing steps in connection with lending, or performing back-office functions;

(B) May include such other activities as are permitted for representative offices of foreign banks under 12 C.F.R. 211.24(d); and

(C) May include such other activities as are permitted for representative offices of foreign banks pursuant to federal law or regulation, subject to compliance with any related federal conditions or limitations and subject to the notice and objection procedures set forth in Code Section 7-1-296; but

(D) Do not include contracting for any deposit or deposit-like liability, lending money, or engaging in any other banking activity for the foreign bank;

(2) Making credit decisions if:

(A) The foreign bank also operates one or more branches or agencies in the United States;

(B) The loans approved at the representative office are made by a branch or agency of the foreign bank;

(D) Authorized for representative offices of foreign banks pursuant to federal law or regulation, subject to compliance with any related federal conditions or limitations and subject to the notice and objection procedures set forth in Code Section 7-1-296; and

(3) Other functions for or on behalf of the foreign bank or its affiliates, including operating as a regional administrative office of the foreign bank, but only to the extent that the functions are not banking activities and are not prohibited by applicable federal or state law.

§ 7-1-1134

The department may deny an application for registration or revoke the registration of a representative office if the department by examination or other credible evidence finds that the foreign bank:

(1) Has refused to permit the department to examine the books, papers, accounts, records, or affairs of a Georgia state representative office in accordance with Code Sections 7-1-1102 and 7-1-1103;

(2) Has violated this article, another law or rule applicable to the foreign bank or a Georgia state representative office, or a final and enforceable order of the department;

(3) Has misrepresented or concealed a material fact in the original or subsequent registration applications;

(4) Has violated a condition of an agreement between the foreign bank and the department or other functional regulatory agency;

(5) Has had its authority or existence terminated or canceled in its jurisdiction of incorporation; or

(6) Conducts business in an unsafe and unsound manner.

§ 7-1-1135

(a) Notice of the department's intention to enter an order revoking a registration or denying an application for registration shall be given to the foreign bank in writing, sent via email to the foreign bank at the email address provided to the department by such foreign bank for receipt of notifications. Within 20 days of the date of issuance of the notice of intention to enter an order of revocation or denial under this article, the foreign bank may request in writing a hearing to contest the order. If a hearing is not requested in writing within 20 days of the date of issuance of such notice of intention, the department shall enter a final order regarding the revocation or denial. Any final order of the department revoking a registration or denying an application for registration shall state the grounds upon which it is based and shall be effective on the date of issuance. The department shall promptly send a copy of such order by email to the foreign bank.

(b) If the Georgia state representative office's registration has been approved and the department issues a subsequent notice of intent to revoke registration, the foreign bank shall not accept new business during the pendency of the hearing unless the commissioner gives prior written approval, except that it shall comply with any stricter requirements imposed by 12 U.S.C. Section 3105(e) of the International Banking Act.

(c) Information relating to the financial condition and business affairs of the foreign bank, except previously published statements and information, is confidential and may not be disclosed by the commissioner or an employee of the department except as provided by Code Section 7-1-70.

(d) A decision by the department denying an application for registration or of an order revoking a registration shall be subject to review in accordance with Code Section 50-13-19.

§ 7-1-1136

A foreign bank that has had its Georgia state representative office registration revoked under this part shall cease all activities in this state except to the extent authorized by Code Section 7-1-1101. Continued activity in this state of an unregistered foreign bank is subject to Code Section 7-1-5.

§ 7-1-1137

(a) If a foreign bank with a registered Georgia state representative office is dissolved, has its authority or existence terminated or canceled in the jurisdiction of its incorporation, or has its authority to maintain its Georgia state representative office terminated by the Board of Governors of the Federal Reserve System under 12 U.S.C. Section 3107(b) of the International Banking Act, an officer, manager, or agent of the foreign bank shall deliver to the department a certified copy of:

(1) A certificate of the official responsible for records of banking corporations of the foreign bank's jurisdiction of incorporation attesting to the occurrence of dissolution or of termination or cancellation of authority or existence;

(2) An order or decree of a court directing the dissolution of the foreign bank or the termination or cancellation of its authority or existence; or

(3) An order of the Board of Governors of the Federal Reserve System terminating its authority under 12 U.S.C. Section 3107(b) of the International Banking Act.

(b) The filing with the department of such certificate, order, or decree has the same effect as provided in Code Section 7-1-1136 as if the registration made under this article were revoked by the department.

§ 7-1-1138

Every Georgia state representative office registered with the department under the provisions of Code Section 7-1-721 as of June 30, 2023, shall remain registered and be allowed to conduct business in Georgia. Such Georgia state representative offices shall comply with this part and Part 1 of this article.

Chapter 2 Credit Union Deposit Insurance Corporation

§ 7-2-1

(a) Within one year after July 1, 1974, the duly authorized representatives of not less than three credit unions chartered and existing under the laws of this state may petition the Secretary of State for incorporation of a nonprofit credit union deposit insurance corporation, hereinafter referred to as the “corporation.” Such petition shall be accompanied by articles of incorporation in triplicate which shall include the following:

(1) The name of the proposed corporation, which shall include the words “deposit insurance corporation,” and no corporation other than one incorporated pursuant to this chapter shall use the words in sequence “deposit insurance corporation”;

(2) The location of its initial registered office;

(3) The purpose and nature of the business of the corporation, which shall be to aid and assist any member financial institution which is in liquidation or facing liquidation due to insolvency in order that the deposits and shares of any member shall be insured or guaranteed against loss in such amounts as may from time to time be established by the board of directors of the corporation pursuant to this chapter;

(4) Membership in the corporation, which shall be limited, except as otherwise expressly provided, to financial institutions, approved for membership by the directors of the corporation upon recommendation of the Department of Banking and Finance of this state, hereinafter referred to as the “department”; and

(5) The term of existence of the corporation, which shall be perpetual unless otherwise limited.

(b) Upon receipt of the articles, the Secretary of State shall forward one copy to the department.

(c) Before the articles are approved by the department, an appropriate investigation shall be made by the department for the purpose of determining:

(1) Whether the articles conform to this chapter;

(2) The general character and fitness of the petitioners;

(3) The economic advisability of establishing the proposed corporation; and

(4) Whether such corporation would cause undue harm to a corporation already existent under this chapter.

Upon approval of the articles in writing by the department, such written approval shall be delivered to the Secretary of State.

(d) Upon receipt of the approval of the department, the Secretary of State shall thereupon issue a certificate of incorporation to the petitioners.

§ 7-2-2

Amendments to the articles of incorporation, adopted by a vote of two-thirds of the member financial institutions present at an annual meeting or a special meeting called for that purpose, shall be filed with the Secretary of State in the same manner as the original articles and shall become effective upon approval by the department and subsequent notification of the Secretary of State.

§ 7-2-3

(a) At its organizational meeting, the membership of the corporation shall adopt bylaws to govern the operations of the corporation. These bylaws shall be submitted to the department for approval and, if found to be consistent with this chapter, conducive to the purposes for which the corporation was formed, and equitable to all members, the bylaws shall be approved by the department.

(b) The original bylaws shall be adopted by and may thereafter be amended by a vote of at least a majority of the members present and voting at any regular meeting or special meeting called for such purpose. Bylaws may also be amended by the vote of at least two-thirds of the members of the board of directors of the corporation. Amendments adopted by the board may be rescinded at the next regular or special meeting of the members in the same manner as is provided for adoption of amendments by the members.

§ 7-2-4

The corporation may:

(1) Enter into contracts, including contracts for reinsurance;

(2) Sue and be sued;

(3) Adopt, use, and display a corporate seal;

(4) Advance funds, in accordance with agreed terms and conditions, to aid member financial institutions to operate and to meet liquidity requirements;

(5) Assume control of the property and business of any member financial institution upon the written direction of the department and operate the financial institution in accordance with the recommendations of the department;

(6) Assist in the merger, consolidation, or liquidation of member financial institutions;

(7) Receive money or other property from its member financial institutions or from any corporation, association, or person;

(8) Invest its funds in such manner as permitted to credit unions under the laws of this state and in such other manner as may be approved by the department;

(9) Borrow money from any source upon such terms and conditions as the board of directors may determine;

(10) Purchase in its own name, hold, and convey property of any nature necessary for the convenient transaction of its business;

(11) Receive by assignment or purchase from its members any property of any nature owned by those members;

(12) Sell, assign, mortgage, encumber, or transfer property of any nature;

(13) Declare and pay dividends on membership fees with the approval of the department; and

(14) Adopt and amend bylaws, rules, and regulations carrying out the purposes of the corporation.

§ 7-2-5

(a) Any financial institution, as defined in Code Section 7-1-4 or chartered under the laws of the United States or of any state or territory of the United States, may become a member of the corporation upon application by its directors, recommendation of the department, and approval of the directors of the corporation.

(b) Before making its recommendation, the department shall consider:

(1) The history, financial condition, and management policies of the applicant;

(2) The economic advisability of insuring the applicant without undue risk to the fund;

(3) The general character and fitness of the applicant's management; and

(4) The convenience and needs of the members to be served by the applicant.

(c) Membership in the corporation may be terminated upon 30 days' written notice to the corporation and after providing evidence satisfactory to the department that alternate, comparable insurance of deposits has been obtained by the financial institution. Upon termination of membership, the financial institution shall be entitled to the refunds set forth in subsection (d) of Code Section 7-2-7.

§ 7-2-6.1

Any financial institution insured by the corporation shall have the same powers and privileges as any other state-chartered financial institution of the same class even though such other financial institution is insured under some other state or federal program. Such equality of powers shall not relieve the financial institution, whether insured under this chapter or under an alternative state or federal program, from taking appropriate action to amend its articles of incorporation or bylaws or from obtaining appropriate regulatory approvals before exercising such powers and privileges.

§ 7-2-7

(a) Each financial institution accepted for membership shall be required to pay a membership fee of 1 percent of the deposits and shares of the financial institution up to $1 million, plus one-half of 1 percent of the deposits and shares from $1 million to $5 million, plus one-fourth of 1 percent of the deposits and shares over $5 million. Payment of the membership fee may be made in three equal installments, the first installment being due upon the approval of the application of the member financial institution and being in an amount of not less than $10.00 and the remaining two installments being due annually thereafter in amounts of not less than $10.00 each year.

(b) The membership fee shall be maintained on an annual basis in the same ratio to deposits and shares as the original membership fee bore to the total of deposits and shares at the time the financial institution initially joined the corporation. Such annual adjustments to the membership fee shall be paid or refunded concurrently with the payment of the annual insurance premium and shall be calculated upon the same deposit and share base as is used in the calculation of the annual premium. The board of directors of the corporation with the approval of the department may authorize a different membership fee structure from that set forth in this Code section.

(c) Membership fees, when paid by the individual member financial institution, may be charged to its regular reserve account or undivided earnings or may be established as an asset or charged in such other manner as may be approved by the department.

(d) The membership fee of each member financial institution may be refunded in whole or in part to the extent that the unencumbered funds of the corporation exceed 2 percent of the aggregate total deposits and shares of the member financial institutions as determined by the most recent call report of condition submitted to the department. Special assessments levied pursuant to subsection (b) of Code Section 7-2-8 may be repaid in such manner as may be approved by the directors of the corporation with approval by the department. Refunds may be paid only to members of the corporation at the time of declaration by the directors of the corporation in proportion to their paid-in membership fees.

(e) Upon termination or revocation of membership, other than through involuntary liquidation, the financial institution shall be entitled to refunds as follows:

(1) Membership fees in full within 30 days;

(2) Pro rata portion of annual premium which is unearned by the corporation in full within 30 days; and

(3) Any special assessment in accordance with its terms, provided that the department may direct that such refunds be disbursed over a period of not more than 24 months at the request of the corporation where such disbursement will not cause an undue financial burden for the member financial institution.

(f) Any financial institution which terminates its membership voluntarily within the 24 months immediately preceding any voluntary cessation of business by the corporation shall be entitled to a pro rata distribution of the undivided earnings of the corporation. Such distribution shall be the lesser of an amount equal to that portion of the retained earnings at the end of the fiscal year immediately preceding the termination of membership determined by the proportion of the terminating members' membership fees to the total membership fees at the end of such fiscal year or the amount which would have been distributed had membership been retained until the final distribution.

§ 7-2-8

(a) A regular annual premium, not to exceed one-twelfth of 1 percent of the deposits and shares of the member financial institution, shall be levied by the directors of the corporation. Such premium may be raised, lowered, waived, or refunded, in whole or in part, with prior approval by the department, in the event that the total funds held by the corporation justify or require such change. The corporation may charge its financial institutions variable rate premiums based upon determination of risk to the fund, provided that such risk rating is made according to formulas adopted by the directors of the corporation and approved by the department.

(b) In the event of potential impairment of the corporation's funds, special assessments may be levied by the directors of the corporation with the prior approval of the department, provided that such special assessments shall not exceed, in the aggregate, 1 percent of the deposits and shares of each member financial institution. Such special assessments shall be in the form of loans from the member financial institution to the corporation.

(c) Membership fees, annual premiums, and special assessments shall be based upon deposits and shares of member financial institutions as reported to the department in its most recent call report of condition and shall be payable within 30 days of the date on which the corporation notifies its members of any such premium or assessment.

(d) Annual premiums paid under this Code section shall be charged to the operating expenses of each member financial institution.

(e) In the event of liquidation of the corporation, all assets remaining after the payment or provision for payment of all debts and taxes and expenses of liquidation, including distributions to former members as provided for in Code Section 7-2-7, shall be distributed to the then existing member financial institutions in proportion to their membership fees paid into the corporation.

§ 7-2-9

(a) Upon receipt of the first installment of the prescribed membership fee from the financial institutions which have agreed to become members of the corporation as provided in this chapter, the corporation may commence its insurance of the deposits and shares of the member financial institutions.

(b) Each insured financial institution may advise its members and advertise that its deposits and shares are insured by the corporation, in such manner established by the directors of the corporation and approved by the department, upon receipt of a notification from the corporation that it has been accepted for membership in the corporation by its directors and upon payment of any required premiums or fees.

(c) The amount of insurance coverage on deposits and shares provided by the corporation may be increased from time to time by the directors of the corporation with the approval of the department; provided, however, that in no event may the insurance be increased to an amount greater than the largest amount insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration.

(d) The corporation may insure or partially insure the uninsured shares and deposits of any financial institution primarily insured by it or some other governmental or private insurance program, at a cost to be determined by the directors of the corporation with the approval of the department, provided the department approves the financial institution for such coverage. Financial institutions having excess deposit insurance coverage shall not be required to be members of the corporation by virtue of such insurance coverage.

(e) No other forms of insurance except that authorized by this Code section may be sold or offered by the corporation.

§ 7-2-10

The corporation's business shall be conducted by the incorporators, who shall serve until the organizational meeting of the corporation, at which time not less than three directors shall be elected by the members of the corporation in accordance with the bylaws. Thereafter, the corporation's business shall be conducted by the directors.

§ 7-2-11

(a) The corporation shall not be deemed an insurance company within the meaning of the laws of the State of Georgia relating to insurance or providing for the supervision of insurance companies, but it shall be subject to the exclusive supervision of the department. The department shall exercise the same powers and authority over the corporation as is now or hereafter exercised over banks and credit unions under its jurisdiction and shall issue such rules and regulations as shall be necessary to carry out its responsibilities under this chapter.

(b) Any other company which is engaged in the insurance of deposits in financial institutions in this state when approved by the department based upon the criteria set forth in subsection (c) of Code Section 7-2-1 shall be subject to the jurisdiction of the department to the extent of its deposit insurance activities and to the same extent as a corporation organized pursuant to this chapter. Nothing contained in this chapter shall amend, modify, or otherwise restrict any authority or jurisdiction possessed by the Commissioner of Insurance prior to July 1, 1984. In the event a conflict exists between this chapter and Title 33, known as the “Georgia Insurance Code,” Title 33 shall control.

§ 7-2-12

(a) The department shall forward to the corporation copies or summaries of all examination reports of member financial institutions. In the event a summary is provided, the corporation may request a complete and full report.

(b) The corporation may request the department to conduct additional examinations or to order independent audits of the records of member financial institutions. The department shall cooperate with the corporation upon such a request but shall use its discretion in determining the scope and timing of such additional examinations or audits.

(c) If the directors of the corporation ascertain evidence of carelessness, unsound practices, or mismanagement of any member financial institution which appears to affect adversely the solvency of the financial institution or threatens undue loss to the corporation, the directors may order that corrective action be taken or revoke the membership of the financial institution in the corporation or recommend to the department that the financial institution be liquidated. The department shall be provided a copy of any such order or letter of revocation. In the event of revocation of its membership, the financial institution shall notify all of its members of such revocation and that the deposits and shares are no longer insured by the corporation, provided that, in the event membership is revoked, insurance coverage shall continue in effect for 180 days. No refund required by subsection (e) of Code Section 7-2-7 shall be payable until after insurance coverage is terminated.

(d) If any member financial institution shall fail to pay any assessment, premium, or membership fee lawfully required under this chapter, the directors of the corporation shall notify the department, and the department shall forthwith notify the financial institution in writing. The failure of such financial institution to make such payment within 15 days after the said written notice may subject the financial institution to the sanctions set forth in subsection (c) of this Code section.

§ 7-2-13

(a) If a financial institution is aggrieved by a decision or order of the corporation or if the corporation is aggrieved by a decision or order of the department, the financial institution or the corporation, as the case may be, shall, upon appropriate petition and after due notice, be entitled to a hearing and administrative review of the action before the department, which may stay enforcement of such actions pending the administrative review.

(b) Judicial review of such decisions or orders, other than decisions or orders to revoke the membership of a financial institution, shall not be available unless the aggrieved party has sought administrative review under this Code section.

§ 7-2-14

The corporation shall be exempt from all state and local taxes except real property taxes.

Chapter 3 Installment Loans

§ 7-3-1

This chapter shall be known and may be cited as the “Georgia Installment Loan Act.”

§ 7-3-2

(a) The powers, functions, and duties of the office of the Commissioner of Insurance relative to this chapter are transferred to the Department of Banking and Finance effective July 1, 2020. All action taken by the office of the Commissioner of Insurance prior to that date shall be considered valid, and the department shall, as of July 1, 2020, assume all ongoing and continuing obligations pursuant to this chapter. All personnel, supplies, records, materials, furniture, furnishings, books, equipment, motor vehicles, and services of the office of the Commissioner of Insurance utilized pursuant to the authority granted under this chapter shall be transferred to the department on July 1, 2020. Any action or investigation pending pursuant to this chapter shall remain in full force and effect and any powers relating to such action or investigation shall be transferred to the department on July 1, 2020.

(b) All rules, orders, and actions adopted by the Commissioner of Insurance pursuant to this chapter shall remain in full force and effect as rules, orders, and actions of the department unless amended, repealed, or superseded by rule, order, or action of the department.

(c) All property, real and personal, funds, accounts receivable, contracts, liabilities, and obligations of the office of the Commissioner of Insurance for effectuating this chapter shall become the property, funds, accounts receivable, contracts, liabilities, and obligations of the department on July 1, 2020. Appropriations to the Commissioner of Insurance for functions transferred to the department pursuant to this Code section shall be transferred as provided in Code Section 45-12-90.

§ 7-3-3

As used in this chapter, the term:

(1) “Control” or “controlling” means the direct or indirect possession of power to direct or cause the direction of management and policies of a person.

(2) “Covered employee” means any employee of a licensee engaged in any function related to making installment loans or servicing installment loans made by others, excluding loans made by affiliated entities.

(3) “Department” means the Department of Banking and Finance.

(4) “Executive officer” means an individual who performs significant managerial, supervisory, or policy-making functions on behalf of a person, including, but not limited to, the vice presidents, chief executive officer, president, chief financial officer, chief operating officer, secretary, and treasurer.

(5) “Individual” means a natural person.

(6) “Installment lender” or “lender” means any person that advertises, solicits, offers, or makes installment loans or services installment loans made by others, excluding loans made by affiliated entities.

(7) “Installment loan” or “loan” means a contract or agreement to make a loan to an individual in an amount of $3,000.00 or less, including the renewal or refinancing of any such loan.

(8) “License” means an authorization issued by the department or required to be obtained under this chapter to engage in the business of making installment loans.

(9) “Licensee” means a person to whom a license under this chapter has been issued.

(10) “Nationwide Multistate Licensing System and Registry” means a licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of certain persons engaged in nondepository activities.

(11) “Owner” means a person that:

(A) Owns, directly or indirectly, 10 percent or more interest in a corporation or any other form of business organization;

(B) Owns, directly or indirectly, 10 percent or more of the voting shares of any corporation or any other form of business organization; or

(C) Exerts control, directly or indirectly, over a corporation or any other form of business organization, regardless of whether such person owns or controls such interest through one or more individuals or one or more proxies, powers of attorney, nominees, corporations, associations, limited liability companies, partnerships, trusts, joint stock companies, other entities or devices, or any combination thereof.

(12) “Person” means any individual, sole proprietorship, corporation, limited liability company, partnership, trust, or any other group of individuals, however organized.

(13) “Unique identifier” means a number or other identifier assigned by protocols established by the Nationwide Multistate Licensing System and Registry.

§ 7-3-4

(a) No person shall engage in the business of making installment loans or acting as an installment lender in this state unless such person is licensed in accordance with this chapter or exempt from licensure as provided in subsection (b) of this Code section. No person within the operation of this chapter shall charge, contract for, or receive directly or indirectly on or in connection with any loan, any interest, charge, fee, compensation, or consideration which is greater than the rates for same provided in this chapter.

(b) This chapter shall not apply to:

(1) Businesses chartered or licensed under the authority of any law of this state or of the United States as banks, trust companies, savings and loan associations, savings banks, or credit unions or to the transactions of such businesses;

(2) Banks or credit unions chartered under the authority of any state which have deposits that are federally insured or to the transactions of such businesses;

(3) Pawnbrokers, as defined in Code Section 44-12-130, or to the transactions of pawnbrokers;

(4) The University System of Georgia or its educational units, private colleges and universities in this state and associations thereof, or student loan transactions of such educational entities;

(5) An individual employed by a licensee or any person exempted from the licensing requirements of this chapter when acting within the scope of employment and under the supervision of the licensee or exempted person as an employee and not as an independent contractor;

(6) Any agency, division, or instrumentality of the federal government of the United States of America; the government of the State of Georgia or the government of any other state; or any county or municipal government in the State of Georgia; and the transactions of all such governmental entities;

(7) Retail installment transactions engaged in by retail installment sellers, as those terms are defined in Code Section 10-1-31;

(8) Retail installment transactions engaged in by retail sellers, as those terms are defined in Code Section 10-1-2;

(9) Transactions in which a lender offers a consumer a line of credit of more than $3,000.00 but the consumer utilizes $3,000.00 or less of such line of credit so long as there are no restrictions in place that would limit the consumer's ability to utilize more than $3,000.00 of the line of credit at any one time; or

(10) A tax exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986 that does not impose any interest, fees, or other charges in connection with installment loans or the servicing of such loans.

§ 7-3-10

No person shall advertise, display, distribute, or broadcast in any manner whatsoever any false, misleading, or deceptive statement or representation with regard to the rates, terms, or conditions for loans subject to this chapter.

§ 7-3-11

Every authorized licensee location under this chapter may lend any sum of money not to exceed $3,000.00, with the term for any individual loan not to exceed a period of 36 months and 15 days or less and may charge, contract for, collect, and receive interest and fees and may require the fulfillment of conditions on such loans as provided in this Code section:

(1) Interest. A licensee may charge, contract for, receive, and collect interest at a rate not to exceed 10 percent per annum of the face amount of the contract, whether repayable in one single payment or repayable in monthly or other periodic installments. On loan contracts repayable in 18 months or less, the interest may be discounted in advance; and, on contracts repayable over a greater period, the interest may be added to the principal amount of the loan. On all contracts, interest or discount shall be computed proportionately on equal calendar months;

(2) Loan fee . In addition thereto, a licensee may charge, contract for, receive, or collect at the time the loan is made a fee in an amount not greater than 8 percent of the first $600.00 of the face amount of the contract plus 4 percent of the excess; provided, however, that such fee shall not be charged or collected on that part of a loan which is used to pay or apply on a prior loan or installment of a prior loan from the same licensee to the same borrower made within the immediately preceding six-month period; provided, however, if the loan balance is $300.00 or less, the said period shall be two months, not six months; provided, further, that nothing contained in this paragraph and paragraph (1) of this Code section shall be construed to permit charges, interest, or fees of any nature whatsoever in the aggregate in excess of the charges, interest, and fees which would constitute a violation of Code Section 7-4-18 and this chapter shall in no way affect Code Section 7-4-18. If a borrower prepays his or her entire loan to a licensee and within the following 15 days obtains a new loan from that licensee and if this is done within the six-month period or the two-month period above described, as may be applicable, the fee may be charged only on the excess by which the face amount of the new contract exceeds the amount which the borrower repaid to that licensee within the said 15 day period;

(3) Insurance premiums . A licensee may charge and collect from the borrower premiums actually paid or to be paid for insurance obtained for the borrower. A licensee may accept as security on any loan or advance made under this chapter any one or any combination of the following:

(A) Insurance on tangible property against substantial risks or loss;

(B) Reasonable insurance on the life and health of the principal party; or

provided, however, that any such insurance shall be reasonably related to the type and value of the property insured and to the amount and term of the loan and shall be obtained from an insurance company authorized to conduct such business in the State of Georgia and at rates lawfully filed by such company with the Commissioner of Insurance and through a regular insurance agent licensed by the Commissioner of Insurance; provided, further, that the amount of life, health, or accident insurance required as security for loans made under this chapter shall not exceed the amount of the loan, including charges, to be secured; and the premiums on such insurance required of the principal party obligated shall be limited to premiums reasonably based upon reliable actuarial experience and sound insurance practice; and the Commissioner of Insurance is authorized and directed to promulgate rules and regulations to effectuate this provision related to insurance obtained by the borrower in accordance with the spirit and intent thereof. It shall be the duty of the Commissioner of Insurance to determine and promulgate by rule and regulation the rates and maximum premiums permissible to be charged for life, health, and accident insurance required as security for a loan made under this chapter and to make regulations incident thereto necessary to effectuate the same; such premiums, when thus established and as changed from time to time in the manner aforesaid, shall be the maximum effective and permissible charges under this paragraph. Premiums paid or to be paid pursuant to the authority of this paragraph shall not constitute interest. The insurance company in turn may pay to the party writing the insurance policy sold in connection with the loan a fee or commission in an amount which is reasonable in relationship to the transaction and in no event in excess of the amount of fee or commission customarily paid within the industry where comparable insurance is sold in a transaction not involving credit, as determined by the Commissioner of Insurance;

(4) Late charge . A licensee may charge and collect from the borrower a late or delinquent charge of $10.00 or an amount equal to 5¢ for each $1.00 of any installment which is not paid within five days from the date such payment is due, whichever is greater, provided that this late or delinquent charge shall not be collected more than once for the same default; and

(5) Maintenance charge . In addition thereto, a licensee may contract for, charge, receive, and collect a maintenance charge of $3.00 for each month in the term of the loan contract on each loan made, whether repayable in one single payment or repayable in weekly, monthly, or other periodic installments. Refunds of unearned maintenance charges shall be made in accordance with the method prescribed in Code Section 7-3-14, and such maintenance charges will be subject to paragraph (4) of this Code section. Nothing contained in Code Section 7-4-18, as now or hereafter amended, shall be construed to apply to this paragraph; and loans made in conformity with this paragraph shall in no way constitute a violation of Code Section 7-4-18, as now or hereafter amended.

(6) Deferment .

(A) Hardship deferment : Nothing in this article shall be construed as prohibiting any licensee and borrower from contracting to defer periodic payments consisting of principal payments, interest, fees, premiums, and charges provided that no additional interest, fees, premiums, or charges are incurred or otherwise imposed as a result of such deferment. Nothing in subparagraph (B) of this paragraph shall be construed as limiting the duration of a hardship deferment or the number of hardship deferments that can be granted during a loan term.

(B) Convenience deferment : A licensee and a borrower may, at any time, contract to defer all of or part of one or more unpaid installments, and the licensee may make and collect a charge therefor, subject to the following provisions:

(i) A convenience deferment may be for any duration agreed upon by the licensee and the borrower but shall not exceed four months. A licensee may agree to multiple convenience deferments during the loan term provided that the total duration of all convenience deferments does not exceed four months;

(ii) A licensee may charge a fee for the deferment. The deferment fee shall not exceed an amount equal to the result of applying the interest rate provided in the original loan agreement to the amount deferred for the deferment period. The deferment fee shall be calculated without regard to the difference in lengths of months by counting each day of the deferment period as one-thirtieth of a month. The fee may be collected at the time it is assessed or at any later date as agreed upon by the licensee and the borrower; provided, however, that the deferment fee is earned pro rata during the deferment period and is fully earned on the last day of the deferment period;

(iii) A licensee shall not charge any fees, premiums, interest, or charges other than the deferment fee for the duration of the deferment period and such fees, premiums, interest, or charges other than the deferment fee shall not accrue during the deferment period;

(iv) If a licensee renews or refinances an installment loan within three months after the end of the convenience deferment period, the licensee must refund or credit the entire convenience deferment fee to the borrower;

(v) If a licensee enters into a convenience deferment agreement with a borrower and the licensee enters into a hardship deferment agreement with the borrower within three months of the end of the convenience deferment period, the licensee must refund or credit the entire convenience deferment fee to the borrower; and

(vi) If a loan is prepaid during a deferment period, the licensee shall refund or credit to the borrower any unearned portion of the deferment fee as calculated pursuant to division (ii) of this subparagraph in addition to any other refund or credit due to the borrower for prepayment.

(i) The amount or amounts deferred;

(ii) The length of the deferment period, including the due date for the borrower's next payment;

(iii) The amount of the deferment fee, if applicable; and

(iv) Where any credit insurance or ancillary product with a specific term was purchased by the borrower, the following disclosure to the borrower: “You have purchased a credit insurance product(s) and/or [identify the specific ancillary product] in connection with this loan. The deferment agreed to herein will not extend the term of coverage of those products.”

(D) Whenever a licensee enters into a deferment agreement with the borrower hereunder, the deferment shall not be considered to be an improper extension of the loan term, and the original loan term shall be extended by the period deferred. For purposes of granting a deferment, licensees may extend the term of the loan beyond the maximum term limit of 36 months and 15 days.

(E) A licensee shall not offer or require a borrower to obtain credit insurance or any other ancillary product for the extension of the original loan term due to a deferment.

(F) After the conclusion of a deferment period, the borrower shall resume payments in the same amounts and intervals as set forth in the original loan agreement. Licensees shall not require borrowers to make a lump sum repayment.

(G) Licensees shall maintain a monthly journal of loans that were deferred by identifying the specific borrower that entered into the deferment agreement, the type of deferment granted, and the status of such deferment.

§ 7-3-12

No licensee shall charge, contract for, or receive any other or further amount in connection with any loans authorized by this chapter in addition to those provided in Code Section 7-3-11, except the actual lawful fees paid to a public official or agency of the state for filing, recording, or, on loans over $100.00, the amount of the lawful premiums, no greater than such fees, actually paid for insurance against the risk of nonrecording or releasing any instrument securing the loan; the court costs and attorney fees authorized by law incurred in the collection of any contract in default; and the actual and reasonable expenses of repossessing, storing, and selling any collateral pledged as security for any contract in default. No licensee shall divide into separate parts any contract for the purpose or with the effect of obtaining charges in excess of those authorized by this chapter.

§ 7-3-13

If a licensee purchases or receives by transfer or assignment any note, bill of sale to secure debt, title retention contract, conditional sales contract, or any other similar contract that would otherwise be governed by this chapter, the licensee shall comply with the provisions of this chapter when making a loan for the purpose of paying off all or any part of such instrument.

§ 7-3-14

Notwithstanding the provisions of any contract to the contrary, a borrower may at any time prepay all or any part of the unpaid balance to become payable under any installment loan. If the borrower prepays the loan in full before maturity, the licensee shall refund to the borrower a portion of the prepaid interest, calculated in complete even months (odd days omitted), as follows: the amount of the refund shall represent at least as great a proportion of the total interest as the sum of the periodical time balance after the date of prepayment bears to the sum of all periodical time balances under the schedule of payments in the original contract. Where the amount of the refund due to anticipation of payment is less than $1.00, no refund need be made. If the borrower has been required to purchase insurance coverage other than insurance coverage in a blanket policy when the borrower has paid no acquisition cost, the borrower shall have the option to continue such insurance in force for the balance of the policy period, with all rights transferred to the borrower or his or her assigns, in which event no refund of insurance premiums shall be made.

§ 7-3-15

In addition to any applicable disclosure requirements, at the time the installment loan is made, each licensee under this chapter shall deliver to the borrower or, if there are multiple borrowers, to one of the borrowers a copy of the loan contract or a written itemized statement in the English language showing in clear terms the date and amount of the loan, a schedule of the payments or a description thereof, the type of security for the loan, the licensee's name, unique identifier, business address, the actual amount of cash advanced to or on behalf of the borrower, the amount of each class of insurance carried and the premiums paid thereon, and the amount of interest and fees. Each licensee shall give a receipt for every cash payment made.

§ 7-3-16

(a) On and after July 1, 2022, in addition to all other fees, license fees, fines, or other charges now or hereafter levied or assessed, there is imposed on each loan made pursuant to this chapter a fee of 0.125 percent of the gross loan amount. Such per loan fee shall become due on the making of any such loan, including, but not limited to, the closing of a loan, the renewal or refinancing of a loan, or a modification of a loan which results in the execution of a new or amended loan agreement.

(b) Such per loan fee is levied and assessed against the person so licensed and shall be paid by such person and shall not be added in any manner as an additional fee or charge against the borrower. Such per loan fee shall be remitted to the department at the time and in the manner specified by rules and regulations of the department.

(c) In the event any person fails or refuses to remit the fees required by this Code section within the time prescribed, the fees shall bear interest at the rate of 1 percent per month. Interest shall begin to accrue from the date the fees are due until the date the fees are paid. For purposes of this Code section, any period of less than one month shall be considered to be one month.

(d) In the event any person fails or refuses to remit the per loan fees required by this Code section within the time prescribed, there shall be added to the fees a penalty equivalent to 25 percent of the fees due, but in no case shall the penalty so added be less than $5.00. In the event any person fraudulently remits the incorrect fees, there shall be added to the fees a penalty equivalent to 50 percent of the fees due, but in no case shall the penalty so added be less than $5.00.

(e) The 2022 revisions of Code Sections 7-3-16, 7-3-17, and 7-3-18 shall not affect the fees, taxes, and related interest and penalties owed pursuant to the earlier versions of such Code sections for any time prior to July 1, 2022.

(f) The department and its authorized examiners and employees shall have the right to inspect all records of any person licensed pursuant to this chapter, and the department is authorized to promulgate rules and regulations relative to the enforcement of this Code section.

§ 7-3-20

(a) Each applicant for an original or renewal license shall:

(1) Submit an application in writing, under oath, and in such form as the department may prescribe;

(2) Furnish to the Nationwide Multistate Licensing System and Registry the following information:

(A) The legal name and principal business address of the person applying for the license;

(B) The names and the residence and business addresses of each director, owner, and executive officer of the applicant;

(C) The address of each location where the applicant will engage in the business of making installment loans in this state;

(D) Any name, subject to approval by the department, under which the applicant will engage in the business of making installment loans in this state; and

(E) The name and address of the initial registered agent and registered office for service of process in this state;

(3) Submit such other data, financial statements, and pertinent information as the department may require with respect to the applicant or its directors, owners, or executive officers; and

(4) Pay a nonrefundable supervision fee established by rules and regulations of the department.

(b) A person applying for an original license shall pay a nonrefundable investigation fee established by rules and regulations of the department.

§ 7-3-21

(a) An applicant shall provide with its application a corporate surety bond issued by a bonding company or insurance company authorized to do business in this state and approved by the department.

(b) The bond shall:

(1) Be in a form satisfactory to the department;

(2) Be in the aggregate amount of $25,000.00 for the primary location to be operated by a licensee plus $5,000.00 for each additional location to be operated by such licensee, provided that no licensee shall be required to have a bond that exceeds a total amount of $100,000.00;

(3) Run to the State of Georgia for the benefit of the department or any claimant against a licensee arising out of the licensee's business of making installment loans;

(4) Require a licensee to pay any and all money for the benefit of any person damaged by noncompliance of the licensee with this chapter, with rules, regulations, or orders issued by the department pursuant to this chapter, or with any condition of the bond; and

(5) Require a licensee to pay any and all money that may become due and owing to any creditor of or claimant against the licensee arising out of the licensee's business of making installment loans.

(c) Payments due under the bond shall include money owed to the department for fees and related interest and penalties under Code Section 7-3-16 and fines or penalties for noncompliance of the licensee with this chapter or rules, regulations, or orders issued pursuant to this chapter.

(d) Claimants or creditors against the licensee may bring an action directly on the bond.

(e) In no event shall the aggregate liability of the surety exceed the principal sum of the face amount of the bond.

(f) In the event that the principal sum of the bond is reduced by one or more recoveries or payments thereon, a licensee shall:

(1) Provide a new or additional bond so that the total or aggregate principal sum of such bond or bonds equals the sum required under subsection (b) of this Code section; or

(2) Provide an endorsement duly executed by the corporate surety reinstating the bond to the required principal sum thereof.

(g) A bond shall not be canceled by either the licensee or the corporate surety except upon notice to the department electronically through the Nationwide Multistate Licensing System and Registry, and such cancellation shall be effective no sooner than 30 days after receipt by the department of such notice and only with respect to any breach of condition occurring after the effective date of such cancellation.

§ 7-3-22

(a) The department shall conduct an investigation of every applicant for licensure to determine the financial responsibility, experience, character, general fitness, and eligibility for licensure of such applicant. The department may issue the applicant a license if the department determines to its general satisfaction that:

(1) The applicant is financially sound and responsible and able to engage in the business of making installment loans in an honest, fair, and efficient manner and with the confidence and trust of the community;

(2) Approval of the application will promote the convenience and advantage of the community in which the applicant proposes to operate; and

(3) All conditions for licensure set forth in this chapter and in the rules and regulations of the department have been satisfied.

(b) No license shall be transferable or assignable.

(c) Each license shall expire on December 31 of each year, and application for renewal shall be made annually on or before December 1 of each year.

§ 7-3-23

(a) The department is authorized to:

(1) Participate in the Nationwide Multistate Licensing System and Registry to facilitate the sharing of information and standardization of the licensing and application processes for persons subject to this chapter;

(3) Disclose or cause to be disclosed without liability, via the Nationwide Multistate Licensing System and Registry, applicant and licensee information, including, but not limited to, violations of this chapter and enforcement actions, to facilitate regulatory oversight;

(c) Regardless of its participation in the Nationwide Multistate Licensing System and Registry, the department shall retain full and exclusive authority over determinations of whether to grant, renew, suspend, or revoke licenses issued under this chapter. Nothing in this Code section shall be construed to reduce or otherwise limit such authority.

(e) Applicants and licensees shall be required to pay the charges associated with their utilization of the Nationwide Multistate Licensing System and Registry.

§ 7-3-30

(a) Each licensee shall:

(1) Conspicuously post a copy of its license in each location where the licensee engages in installment lending;

(2) Submit to the Nationwide Multistate Licensing System and Registry timely reports of condition, which shall be in such form and shall contain such information as the department may require;

(3) Clearly label all advertisements and any other documents required by rules and regulations of the department with its unique identifier;

(4) Make, keep, and use in its business such books, accounts, and records as the department may require; and

(5) Make available to the department, upon request, any books, accounts, records, files, documents, evidence, or other information relating to the business of making installment loans.

(b) Each licensee shall preserve any books, accounts, and records required to be made, kept, or used pursuant to this Code section or rules and regulations of the department for five years or such greater period of time as prescribed by rules and regulations of the department to the licensee.

(c) A licensee may maintain any books, accounts, and records required to be made, kept, or used pursuant to this Code section:

(1) In photographic, electronic, or other similar form; and

(2) At a location outside of this state so long as such records are transmitted to a location designated by the department within ten days of the date of a written request by the department.

§ 7-3-31

(a) A licensee shall send written notice to the department within ten days of the following:

(1) Any knowledge or discovery that any of the licensee's owners, executive officers, directors, trustees, agents, or covered employees has been convicted of a felony as described in subsection (a) of Code Section 7-3-42;

(2) Any knowledge or discovery that any of the licensee's owners, executive officers, directors, trustees, agents, or covered employees has committed fraud, engaged in dishonest activities, or made any misrepresentation;

(3) The discharge of a covered employee for actual or suspected misrepresentations, dishonest acts, or fraudulent acts;

(4) Any knowledge or discovery of an administrative, civil, or criminal action initiated by any governmental entity against the licensee;

(5) Any knowledge or discovery of a criminal action initiated by any governmental entity for misrepresentations, dishonest acts, or fraudulent acts against any owner, executive officer, director, trustee, agent, or covered employee of a licensee; and

(6) The filing of a petition by or against the licensee under the United States Bankruptcy Code, 11 U.S.C. Sections 101 through 110, for bankruptcy reorganization or the filing of a petition by or against the licensee for receivership or the making of a general assignment for the benefit of its creditors.

(b) A licensee shall send written notice to the department within 30 days of the following:

(1) The commencement of any action brought against it relating to its business of installment lending in Georgia;

(2) The commencement of any action by any creditor or claimant relating to its business of installment lending in Georgia or involving a claim against the bond filed with the department pursuant to Code Section 7-3-21;

(3) The entry of any judgment against the licensee related to its business of installment lending in Georgia; and

(4) Any change in the address of its principal place of business or registered agent for service in Georgia.

(c) The corporate surety that issued a licensee a bond pursuant to Code Section 7-3-21 shall send written notice to the department via registered or certified mail or statutory overnight delivery within ten days of paying any claim or judgment to any creditor or claimant with details sufficient to identify the claimant and the claim or judgment so paid.

§ 7-3-32

(a) A licensee shall not engage in the business of installment lending at a location in this state unless the licensee has first received written approval from the department. Applications or renewals for such additional locations shall be made in writing on a form prescribed by the department and accompanied by a nonrefundable fee in an amount established by rules and regulations of the department.

(b) Each manager of a licensee's location in Georgia shall be approved in writing by the department. A licensee may allow an individual to begin working as a new location manager prior to such approval, provided that the licensee submits an application for approval within 15 days of the new location manager beginning work as a location manager. If the department denies approval of such new location manager, the licensee shall immediately remove the individual upon notice of such denial.

(c) No person shall become an owner of any licensee through acquisition or other change in control or become an executive officer of a licensee unless the person has first received written approval from the department. To apply for such approval, the person shall:

(1) Submit an application to the department in such form as the department may prescribe;

(2) Provide such other information as the department may require concerning the financial responsibility, background, experience, and activities of the applicant or its directors, owners, and executive officers; and

(3) Pay a nonrefundable application fee as prescribed by rule and regulation of the department.

(d) The department may prescribe by rule and regulation additional requirements for approval of an application submitted pursuant to this Code section.

(e) The department shall approve an application properly submitted pursuant to this Code section if it finds that the applicant and its directors, owners, and executive officers have the financial responsibility, character, reputation, experience, and general fitness to warrant a belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with the law.

(f) This Code section shall not apply to:

(1) The acquisition of an interest in a licensee by merger or consolidation with a person licensed pursuant to this article or a person exempt from the licensure requirements of this article under Code Section 7-3-4;

(2) The acquisition of an interest in a licensee by merger or consolidation with a person affiliated through common ownership with the licensee; or

(3) The acquisition of an interest in a licensee by a person by bequest, descent, or survivorship or by operation of law.

(g) Any person acquiring an interest in a licensee in a transaction which is exempt pursuant to subsection (f) of this Code section shall send written notice to the department of such acquisition within 30 days of the closing of such transaction.

§ 7-3-33

No licensee or employee or agent thereof shall willfully use any unreasonable collection tactics. Unreasonable collection tactics shall include, but not be limited to, any conduct by the licensee or any employee or agent thereof which:

(1) Causes the borrower or any member of his or her family to suffer bodily injury or physical harm;

(2) Constitutes a willful or intentional trespass by force of the borrower's home or personal property without process of law;

(3) Holds up the borrower to public ridicule or unreasonably degrades the borrower in the presence of neighbors or business associates;

(4) Involves use of printed material which simulates or resembles a summons, warrant, or other legal process; or

(5) Although otherwise lawful, occurs at an unreasonable hour of the night. Attempts to make collections by means of personal visits, telephone calls, and the like shall be deemed to occur at an unreasonable hour of the night if they occur between the hours of 10:00 P.M. and 5:00 A.M.

§ 7-3-40

(a) The department is authorized to investigate and examine the affairs, businesses, premises, and records of any applicant, licensee, or any other installment lender as often as it deems necessary to carry out the purposes of this chapter, regardless of whether such applicant, licensee, or other installment lender acts or claims to act under any other licensing or registration requirement of this state. The department may conduct such investigation outside of this state if it deems necessary.

(b) The department may conduct an investigation or examination pursuant to this Code section at least once every 60 months; provided, however, that the department may alter the frequency or scope of investigations or examinations through rules and regulations or waive an investigation or examination if it determines that, based on records submitted to the department and the past history of operations in this state, such investigation or examination is unnecessary.

(c) A licensee or other installment lender shall pay a fee as prescribed by rule or regulation of the department to cover the cost of an investigation or examination.

(d) In carrying out an investigation or examination pursuant to this Code section, the department shall be authorized to:

(1) Conduct an on-site examination of any applicant, licensee, or other installment lender at any location without prior notice;

(2) Access, receive, and use any books, accounts, records, files, documents, evidence, or other information, including, but not limited to:

(A) Criminal, civil, and administrative history information, including information related to charges that did not result in a conviction;

(C) Any other documents, information, or evidence the department deems relevant to the investigation or examination, regardless of the location, possession, control, or custody of such documents, information, or evidence;

(3) Enter into agreements or relationships with other government officials or regulatory authorities to improve efficiencies and reduce regulatory burden by sharing resources, documents, records, information, or evidence or by utilizing standardized or uniform methods or procedures;

(4) Accept and rely on investigation or examination reports made by other government officials or regulatory authorities within or outside this state, provided that such reports provide information necessary to fulfill the responsibilities of the department under this chapter;

(5) Accept and incorporate in any report of the department audit reports or portions of audit reports made by an independent certified public accountant on behalf of an applicant or licensee;

(6) Require or permit any person to file a statement in writing as to all the facts and circumstances concerning any matter to be investigated pursuant to this chapter;

(7) Request any financial data relevant to the business of making installment loans;

(8) Administer oaths, call any party to testify under oath, and require the attendance of witnesses;

(9) Require the production of books, accounts, records, files, documents, and papers;

(10) Take the depositions of witnesses; and

(11) Issue subpoenas for any witness or for the production of documentary evidence.

(e) Each licensee or person subject to this chapter shall make available to the department, upon request, any books, accounts, records, files, documents, evidence, or other information relating to the activities of engaging in the business of making installment loans.

(f) No licensee or person subject to investigation or examination under this chapter shall knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, accounts, records, files, documents, evidence, or other information.

§ 7-3-41

(a) A subpoena issued pursuant to Code Section 7-3-40 may be served by:

(1) Registered or certified mail or statutory overnight delivery, return receipt requested, to the addressee's business or personal mailing address;

(2) Examiners appointed by the department; or

(3) The sheriff of the county where such witness resides or is found or where the person in custody of any books, accounts, records, files, documents, or papers resides or is found.

(b) The department may issue and apply to enforce subpoenas in this state at the request of any governmental agency, department, organization, or entity regulating the making of installment loans in another state if the activities constituting the alleged violation for which the information is sought would be a violation of this chapter if the alleged activities had occurred in this state.

(c) If any person refuses to obey a subpoena issued under this chapter, a superior court of appropriate jurisdiction, upon application by the department, may issue to the person an order requiring such person to appear before the court to show cause why such person should not be held in contempt for refusal to obey the subpoena. Failure to obey a subpoena may be punished as contempt by the court.

§ 7-3-42

(a) The department shall not issue a license and may revoke a license if it finds that the applicant or licensee or any director, trustee, owner, executive officer, or covered employee of the applicant or licensee has been convicted of a felony in any jurisdiction or of a crime which, if committed within this state, would constitute a felony under the laws of this state. For the purposes of this article, a person shall be deemed to have been convicted of a crime if such person shall have pleaded guilty or nolo contendere to a charge thereof before a court or federal magistrate or shall have been found guilty thereof by the decision or judgment of a court or federal magistrate or by the verdict of a jury, irrespective of the pronouncement of sentence or the suspension thereof and regardless of whether first offender treatment without adjudication of guilt pursuant to the charge was entered or an adjudication or sentence was otherwise withheld or not entered on that charge, unless and until such plea of guilty or nolo contendere or such decision, judgment, or verdict shall have been set aside, reversed, or otherwise abrogated by lawful judicial process or until probation, sentence, or both probation and sentence of a first offender without adjudication of guilt have been successfully completed and documented or unless the person convicted of the crime shall have received a pardon therefor from the President of the United States or the governor or other pardoning authority in the jurisdiction where the conviction occurred.

(b) The department shall be authorized to obtain criminal history record checks with respect to any applicant or licensee, any owner of the applicant or licensee, and any individual who is a director, trustee, executive officer, or covered employee of the applicant or licensee. Such criminal history record checks may be requested by the department through the Georgia Crime Information Center and the Federal Bureau of Investigation, and the department shall have the authority to receive the results of such checks. In connection with an application under this article, the department may use the Nationwide Multistate Licensing System and Registry as a channeling agent for the submission of fingerprints to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information for a state, national, and international criminal history background check and the receipt of such checks by the department. Fees required for a criminal history record check by the Georgia Crime Information Center or the Federal Bureau of Investigation shall be paid by the applicant or licensee.

(c) Upon receipt of fingerprints, fees, and other required information, the Georgia Crime Information Center shall promptly transmit fingerprints to the Federal Bureau of Investigation for a search of bureau records and an appropriate report and shall conduct a search of its own records and records to which it has access. The Georgia Crime Information Center shall notify the department in writing of any finding or if there are no such findings.

(d) All criminal history record checks received by the department shall be used by the department for the exclusive purpose of carrying out the responsibilities of this article, shall not be a public record, shall be confidential and privileged, and shall not be disclosed to any other person or agency except to any person or agency which otherwise has a legal right to inspect such records. All such records received by the department shall be maintained in conformity with the requirements of the Georgia Crime Information Center and the Federal Bureau of Investigation, as applicable.

(e) Every applicant and licensee shall be authorized and required to obtain and maintain the results of criminal history record checks on covered employees. Such criminal background checks shall be commercial background checks. Applicants and licensees shall be responsible for any applicable fees charged by the company performing the criminal background checks. An applicant or licensee may only employ an individual whose criminal history has been checked and has been found to be in compliance with all lawful requirements prior to the initial date of hire. This provision shall not apply to directors, owners, or executive officers of applicants or licensees, whose backgrounds shall have been investigated through the department before taking office, beginning employment, or securing ownership. The department shall be entitled to review the files of any applicant or licensee to determine whether the required commercial background checks have been conducted and whether all covered employees are qualified. Notwithstanding the requirement that applicants and licensees conduct such commercial background checks, the department shall retain the right to obtain conviction data on covered employees of applicants and licensees pursuant to subsection (b) of this Code section.

(f) Upon request by the department, an applicant or licensee shall take all steps necessary to have an international criminal history record check performed on any directors, owners, executive officers, and covered employees of applicants and licensees. The results of such international criminal history record check shall be provided to the department.

§ 7-3-43

(a) The department may suspend or revoke a license if it finds that any ground exists which would require or warrant the denial of an application for the issuance or renewal of a license.

(b) The department may deny an application or suspend or revoke a license upon a finding that an applicant or a licensee has:

(1) Committed any fraud, engaged in any dishonest activities, or made any misrepresentation;

(2) Violated any provision of this chapter, any rule, regulation, or order issued by the department pursuant to this chapter, or any other law in the course of its business of making installment loans;

(3) Made a false statement or failed to give a true reply in an application;

(4) Demonstrated incompetency or untrustworthiness to act as an installment lender;

(5) Failed to pay within 30 days after it became final a judgment recovered in any court in an action arising out of the licensee's business of making installment loans;

(6) Purposely withheld, deleted, destroyed, or altered information requested by the department or made misrepresentations to the department;

(7) Operated in an unsafe or unsound manner; or

(8) Failed or refused to remit the fee required by Code Section 7-3-16 within the required time period.

(c) The department shall not issue a license and shall revoke a license if it determines that the applicant or licensee is not financially sound or responsible or not able to engage in the business of making installment loans in an honest, fair, and efficient manner and with the confidence and trust of the community.

(d) The department shall not issue a license and may suspend or revoke a license if an applicant or licensee was subject to, or employs any person subject to, a final cease and desist order or license revocation under this chapter within the preceding five years. Each applicant or licensee shall, before hiring an employee, examine the Nationwide Multistate Licensing System and Registry to determine that such employee is not subject to a cease and desist order or license revocation.

(e) The department shall not issue a license and may suspend or revoke a license if it finds that any owner, director, trustee, or executive officer of the applicant or licensee has been in one or more of those roles for a licensee whose application has been denied or revoked or suspended within the preceding five years.

§ 7-3-44

(a) Notice of the department's intention to enter an order denying an application or suspending or revoking a license shall be sent to the applicant or licensee in writing by registered or certified mail or statutory overnight delivery addressed to the principal business address of such applicant or licensee. If a person refuses to accept service of such notice, the notice shall be served by the department under any other method of lawful service, and the person shall be liable to the department for a sum equal to the actual costs incurred to serve the notice. Such liability shall be paid upon notice and demand by the department and shall be assessed and collected in the same manner as other fees or fines administered by the department.

(b) Within 20 days of the date of the notice issued pursuant to subsection (a) of this Code section, the applicant or licensee may request in writing a hearing to contest the order. If no such hearing is requested, the department shall enter a final order stating the grounds for the denial, suspension, or revocation. Such final order shall be effective on the date of issuance, and the department shall promptly mail a copy thereof to the principal business address of such applicant or licensee.

(c) A decision by the department denying an application for licensure or an order of the department suspending or revoking a license shall be subject to review in accordance with Chapter 13 of Title 50, the “Georgia Administrative Procedure Act,” except that judicial review shall be available solely in the superior court of the county of domicile of the department.

(d) The department may pursue any administrative action initiated under this chapter against an applicant or licensee to its conclusion, regardless of whether the applicant or licensee withdraws its application or whether a licensee does not renew or surrenders its license.

(e) The suspension, revocation, or expiration of a license shall not alter, ameliorate, or void the duties, defenses, and liabilities of either a borrower or a licensee under any existing agreement or contract entered into by the licensee prior to such suspension, revocation, or expiration.

§ 7-3-45

(a) The department may issue an order requiring a person to cease and desist immediately from unauthorized activities whenever it shall appear to the department that:

(1) Except as provided in paragraphs (2) and (3) of this subsection, a person has violated any law of this state or any rule, regulation, or order of the department. This includes, but is not limited to, a person engaging in any activity that would subject a licensee to suspension or revocation of its license under Code Section 7-3-43, whether or not such person is licensed. Such cease and desist order shall be final 20 days from the date of issuance unless the person to whom it is issued requests a hearing in writing within such 20 day period;

(2) A person without a license is engaging in or has engaged in activities requiring licensure under this chapter. Such cease and desist order shall be final 30 days from the date of issuance without the opportunity for an administrative hearing. If such person obtains a license or submits to the department evidence of licensure or exemption from licensure within the 30 day period, the department shall rescind the order; or

(3) A licensee has received a notice of bond cancellation under Code Section 7-3-21. Such cease and desist order shall be final 20 days from the date of issuance without the opportunity for an administrative hearing. If the required bond is reinstated or replaced and documentation evidencing such is submitted to the department within the 20 day period, the department shall rescind the order. In the event such cease and desist order becomes final, the license shall expire.

(b) Any cease and desist order authorized by this Code section shall be in writing, sent by registered or certified mail or statutory overnight delivery, and addressed to the person's business address or, if the person is an individual, to either the business address or the individual's personal address. Any cease and desist order sent to the person's address that is returned to the department as “refused” or “unclaimed” shall be deemed as received and lawfully served.

(c) Any hearing authorized under paragraph (1) of subsection (a) of this Code section shall be conducted in accordance with Chapter 13 of Title 50, the “Georgia Administrative Procedure Act.”

(d) Judicial review of a final decision of the department issued pursuant to paragraph (1) of subsection (a) of this Code section shall be in accordance with Chapter 13 of Title 50, the “Georgia Administrative Procedure Act,” except that judicial review shall be available solely in the superior court of the county of domicile of the department.

(e) Judicial review of a final decision of the department issued pursuant to paragraph (2) or (3) of subsection (a) of this Code section shall be in accordance with Code Section 7-1-90, except that judicial review shall be available solely in the superior court of the county of domicile of the department.

§ 7-3-46

(a) Whenever a person fails to comply with the terms of a final order or decision of the department issued pursuant to this chapter, the department may, through the Attorney General, petition any superior court of this state having jurisdiction over one or more defendants for an order directing such person to obey the order of the department within a period of time as shall be fixed by the court. Upon the filing of such petition, the court shall allow a motion to show cause why it should not be granted. After a hearing upon the merits or after failure of such person to appear when ordered, the court shall grant the petition of the department upon a finding that the order of the department was properly issued.

(b) Any person who violates the terms of any final order or decision issued pursuant to this chapter shall be liable for a civil penalty not to exceed $1,000.00. Each day the violation continues shall constitute a separate offense. In determining the amount of the penalty, the department shall take into account the appropriateness of the penalty relative to the size of the financial resources of such person, the good faith efforts of such person to comply with the order, the gravity of the violation, the history of previous violations by such person, and such other factors or circumstances that contributed to the violation. The department may reduce any penalty which is subject to imposition or has been imposed pursuant to this Code section. Such penalty shall be final except as to judicial review as provided in Code Section 7-1-90, except that judicial review shall be available solely in the superior court of the county of domicile of the department.

(c) The department may bring an appropriate civil action to enforce any provision of this chapter or any rule, regulation, decision, or order issued pursuant to this chapter, whether by injunction or otherwise, in the superior court of this state having jurisdiction over one or more of the defendants.

(d) The department may prescribe by rule and regulation administrative fines for violations of this chapter or of rules, regulations, decisions, or orders issued pursuant to this chapter.

§ 7-3-47

(a) Except as provided in this Code section, information obtained by the department pursuant to this chapter, which shall include any information disclosed through the Nationwide Multistate Licensing System and Registry, is confidential as provided in Code Section 7-1-70.

(b) In addition to the exceptions set forth in subsection (b) of Code Section 7-1-70, the department is authorized to share information obtained under this chapter with other regulatory or law enforcement authorities. In the case of such sharing, the safeguards to confidentiality already in place within such agencies or authorities shall be deemed adequate. A designated employee or agent of the department may disclose such information as is necessary to conduct a civil or administrative investigation or proceeding related to the business of making installment loans.

(c) The department is authorized to make the following information available to the public on the department's website, upon receipt by the department of a written request, or in the Nationwide Multistate Licensing System and Registry:

(1) The name, business address, telephone number, facsimile number, and unique identifier of a licensee;

(2) The names and titles of the executive officers of a licensee;

(3) The names of the owners of a licensee;

(4) The name, business address, telephone number, and facsimile number of all locations of a licensee;

(5) The terms of or a copy of any bond filed by a licensee;

(6) Information concerning any violation of this chapter or any rule, regulation, or order issued pursuant to this chapter, provided that such information is derived from a final order of the department;

(7) The imposition of an administrative fine or penalty under this chapter; and

(8) The address of a licensee's registered agent for service of process in this state.

§ 7-3-48

(a) Except in the case of malice, fraud, or bad faith, no person shall be subject to civil liability arising out of furnishing the department with information required pursuant to this chapter. No civil cause of action of any nature shall arise against such person:

(1) For any information relating to suspected prohibited conduct furnished to or received from law enforcement officials, their agents, or employees or furnished to or received from other regulatory authorities;

(2) For any information furnished to or received from other persons subject to the provisions of this chapter; or

(3) For any information furnished in complaints filed with the department.

(b) Neither the department nor its employees or agents shall be subject to civil liability, and no civil cause of action of any nature shall exist against the department or its employees or agents arising out of the performance of activities or duties pursuant to this chapter or by publication of any report of activities under this Code section.

§ 7-3-49

Nothing in this chapter shall be construed as repealing Code Section 7-4-4.

§ 7-3-50

(a) Any person, including the executive officers, directors, trustees, owners, agents, and employees of such person, that willfully engages in the business of making installment loans without a license or an exemption pursuant to Code Section 7-3-4 shall be guilty of a felony and punished as provided in Code Section 7-1-845.

(b) Any person who makes a false statement under oath in an application for a license under this chapter or who engages in the business of making installment loans while the license of such person under this chapter is suspended shall be guilty of a misdemeanor.

(c) Any contract made under this chapter by a person guilty of a felony or misdemeanor under subsection (a) or (b) of this Code section shall be null and void.

(d) Any installment lender who fails to comply with this chapter shall be liable to the borrower or borrowers thereon for a single penalty in an amount equal to twice the amount of all interest and loan fees charged to said borrower or borrowers on the most recent loan made by the lender to said borrower or borrowers; provided, however, that the liability under this subsection shall not be less than $100.00.

(e) A licensee shall have no liability under subsection (d) of this Code section if, within 15 days after discovering an error or violation and prior to the institution of an action under this Code section or the receipt of written notice of the error or violation, the lender notifies the person concerned of the error or violation and makes any necessary adjustments in the appropriate account to ensure that such person will not be required to pay charges in excess of those permitted by this chapter.

(f) A licensee shall not be liable for a violation of this chapter if the licensee shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide clerical or typographical error, notwithstanding the maintenance of procedures reasonably adopted to avoid any such error, and makes any necessary adjustments in the appropriate account to ensure that no borrower will be required to pay charges in excess of those permitted by this chapter.

(g) A claim of violation of this chapter against a licensee may be asserted in an individual action only and may not be the subject of a class action under Code Section 9-11-23 or any other provision of law. A claim of violation of this chapter against an unlicensed lender may be asserted in a class action under Code Section 9-11-23 or any other provision of law.

(h) If a contract is made in good faith in conformity with an interpretation of this chapter by the appellate courts of this state or in a rule or regulation promulgated by the department, no provision in this Code section imposing any penalty shall apply, notwithstanding that, after such contract is made, such rule or regulation is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.

(i) Any installment lender who shall knowingly and willfully with intent to defraud a borrower make a contract in violation of this chapter shall be guilty of a misdemeanor, and the contract so made shall be null and void.

§ 7-3-51

Without limiting the power conferred by Chapter 1 of this title, the department may make reasonable rules and regulations, not inconsistent with law, for the interpretation and enforcement of this chapter.

§ 7-3-52

Every license in force and effect under the former provisions of this chapter on June 30, 2020, shall remain in full force and effect on July 1, 2020, and all such existing licensees shall be required to renew their licenses pursuant to Code Sections 7-3-20 and 7-3-22.

Chapter 4 Interest and Usury

§ 7-4-1

The term “usury” means reserving and taking or contracting to reserve and take, either directly or indirectly, a greater sum for the use of money than the lawful interest.

§ 7-4-2

(a)(1)(A) The legal rate of interest shall be 7 percent per annum simple interest where the rate percent is not established by written contract. Notwithstanding the provisions of other laws to the contrary, except Code Section 7-4-18, the parties may establish by written contract any rate of interest, expressed in simple interest terms as of the date of the evidence of the indebtedness, and charges and any manner of repayment, prepayment, or, subject to the provisions of paragraph (1) of subsection (b) of this Code section, acceleration, where the principal amount involved is more than $3,000.00 but less than $250,000.00 or where the lender or creditor has committed to lend, advance, or forbear with respect to any loan, advance, or forbearance to enforce the collection of more than $3,000.00 but less than $250,000.00.

(B) Where the principal amount is $250,000.00 or more, or the lender or creditor has committed to lend, advance, or forbear with respect to any loan, advance, or forbearance to enforce the collection of $250,000.00 or more, the parties may establish by written contract any rate of interest, expressed in simple interest terms or otherwise, and charges to be paid by the borrower or debtor.

(C) Nothing contained in this subsection shall be construed to prohibit the computation and collection of interest at a variable rate or on a negative amortization basis or on an equity participation basis or on an appreciation basis.

(2) Where the principal amount involved is $3,000.00 or less, such rate shall not exceed 16 percent per annum simple interest on any loan, advance, or forbearance to enforce the collection of any sum of money unless the loan, advance, or forbearance to enforce the collection of any sum of money is made pursuant to another law.

(3) As used in this Code section, the term “interest” means a charge for the use of money computed over the term of the contract at the rate stated in the contract or precomputed at a stated rate on the scheduled principal balance or computed in any other way or any other form. Principal includes such charges to which the parties may agree under paragraph (1) of this subsection. Amounts paid or contracted to be paid as either an origination fee or discount points, or both, on any loan secured by an interest in real estate shall not be considered interest and shall not be taken into consideration in the calculation of interest and shall not be subject to rebate as provided in paragraph (1) of subsection (b) of this Code section.

(b)(1) Upon acceleration of the maturity of any loan, advance of money, or forbearance to enforce the collection of any sum of money upon which interest has been precomputed, unearned interest shall be rebated to the debtor in such amount as would result in the rate of interest earned being no greater than the rate of interest established by the original contract. In the case of a loan in which the principal and the interest for the entire term of the loan are included in the face amount of the loan and the loan is to be paid back in weekly, monthly, quarterly, semiannual, or yearly installments, with the interest and principal portions of each installment determined under the pro rata method, any such rebate shall be determined on the pro rata method.

(2) Unless stipulated in the contract, there shall be no prepayment penalty.

(c) Nothing contained in this Code section shall be construed to amend or modify the provisions of Chapter 3 of this title, the “Georgia Installment Loan Act,” Article 1 of Chapter 1 of Title 10, the “Retail Installment and Home Solicitation Sales Act,” Chapter 5 of this title, “The Credit Card and Credit Card Bank Act,” Chapter 22 of Title 33, the “Insurance Premium Finance Company Act,” Part 5 of Article 3 of Chapter 12 of Title 44, relating to pawnbrokers, and, except as provided in Code Section 7-4-3, Article 2 of Chapter 1 of Title 10, the “Motor Vehicle Sales Finance Act.”

(d) Notwithstanding the foregoing, fees and other charges agreed upon by a financial institution and depositor, as defined in Code Section 7-1-4, in a written agreement governing a deposit, share, or other account, including, but not limited to, overdraft and nonsufficient funds, delinquency or default charges, returned payment charges, stop payment charges, or automated teller machine charges, shall not be considered interest.

§ 7-4-3

(a) Notwithstanding the provisions of subsections (a) through (c) of Code Section 10-1-33, any retail installment contract pertaining to:

(1) Any manufactured home with a cash sale price of more than $3,000.00; or

(2) Any motor vehicle where the amount financed is $5,000.00 or more

may provide for such finance charge as the parties may agree in writing.

(b)(1) Any retail installment contract pertaining to a manufactured home or any consumer loan secured by such a home shall contain the contract provisions required by subsection (c) of Section 501 of the Depository Institutions Deregulation and Monetary Control Act of 1980, Public Law 96-221 (12 U.S.C. Section 1735f-7, notes).

(2) Any person violating this subsection shall be subject to the liability specified in Code Section 7-4-5; but the contract or loan shall still be entitled to the benefits of the other provisions of Code Section 7-4-2.

(1) “Finance charge” means the amount agreed upon between the buyer and the seller to be added to the cash sale price and, if a separate charge is made therefor, the amount, if any, included for insurance and other benefits and official fees, in determining the time sale price.

(2) “Manufactured home” means a structure, transportable in one or more sections, which, in the traveling mode, is eight body feet or more in width, or 40 body feet or more in length, or, when erected on site, is 320 or more square feet and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities and includes the plumbing, heating, air-conditioning, and electrical systems contained therein; except that such term shall include any structure which meets all the requirements of this paragraph except the size requirements and with respect to which the manufacturer voluntarily files a certification required by the secretary of Housing and Urban Development and complies with the standards established under The National Mobile Home Construction and Safety Standards Act of 1974, 42 U.S.C. Section 5401, et seq.

(3) “Retail installment contract” or “contract” means an instrument or instruments creating a purchase money security interest or any instrument evidencing an obligation secured by a purchase money security interest.

§ 7-4-4

(a) No person shall advertise in or through any newspaper, radio, television, letter, circular, billhead, or in any way or through any medium any rate of interest or finance charge pertaining to any consumer credit transactions other than a rate stated in simple interest terms or a rate stated in terms which would comply with the federal Truth in Lending Simplification and Reform Act, Public Law 96-221 (15 U.S.C. 57(a) and 1602, et seq.).

(b) There is no liability under this Code section on the part of any owner or personnel of any medium in which an advertisement appears or through which it is disseminated when the publisher, owner, agent, or employee did not have knowledge of the false, misleading, or deceptive character of the advertisement, did not prepare the advertisement, or did not have a direct financial interest in the sale or distribution of the advertised product or service.

(c) Nothing contained in this Code section shall be construed to amend, modify, or repeal any of the provisions of Part 2 of Article 15 of Chapter 1 of Title 10, known as the “Fair Business Practices Act of 1975.”

§ 7-4-5

(a) Any person who fails to comply with subsection (b) of Code Section 7-4-3 or Code Section 7-4-4 with respect to any person is liable to such person in an amount equal to the sum of:

(1) Any actual damage sustained by such person as a result of the failure; and

(2) Twice the amount of any interest or finance charge contracted for in connection with the transaction, except that the liability under this paragraph shall not be less than $100.00 nor greater than $1,000.00.

(b) Such liability may be asserted in an individual action only and may not be the subject of a class action; provided, however, that this provision shall not apply to any class action pending prior to March 31, 1983.

§ 7-4-8

Except as the application of this Code section is modified by Code Section 7-3-5, where the lender neither takes nor contracts to take more than lawful interest, the loan is not rendered usurious by money paid or agreed to be paid others by the borrower in order to obtain the loan.

§ 7-4-9

Interest from date, if the debt is not punctually paid at maturity, may be recovered when so stipulated in the contract, provided interest has not already been included in the principal amount.

§ 7-4-10

(a) Any person, company, or corporation violating the provisions of Code Section 7-4-2 shall forfeit the entire interest so charged or taken or contracted to be reserved, charged, or taken. No further penalty or forfeiture shall be occasioned, suffered, or allowed.

(b) The amount forfeited as provided in subsection (a) of this Code section may be pleaded as a setoff in any action for the recovery of the principal sum loaned or advanced by the defendant in said action.

(c) No contrivance or arrangement between the parties to any such unlawful transaction or their privies, except an actual and full payment of the amount forfeited as provided in subsection (a) of this Code section, shall have the effect of discharging such forfeiture.

(d) No plea or action for the recovery of such forfeiture shall be barred by lapse of time shorter than one year.

§ 7-4-11

Usury is a personal defense; but a creditor may not collect usurious interest from an insolvent debtor to the prejudice of other creditors.

§ 7-4-12

(a) All judgments in this state shall bear annual interest upon the principal amount recovered at a rate equal to the prime rate as published by the Board of Governors of the Federal Reserve System, as published in statistical release H. 15 or any publication that may supersede it, on the day the judgment is entered plus 3 percent.

(b) If the judgment is rendered on a written contract or obligation providing for interest at a specified rate, the judgment shall bear interest at the rate specified in the contract or obligation.

(c) The postjudgment interest provided for in this Code section shall apply automatically to all judgments in this state and the interest shall be collectable as a part of each judgment whether or not the judgment specifically reflects the entitlement to postjudgment interest.

(d) This Code section shall apply to all civil actions filed on or after July 1, 2003.

§ 7-4-12.1

(a) All awards, court orders, decrees, or judgments rendered pursuant to Title 19 expressed in monetary amounts shall accrue interest at the rate of 7 percent per annum commencing 30 days from the date such award, court order, decree, or judgment is entered or an installment payment is due, as applicable. The court may modify the date on which interest shall begin to accrue. It shall not be necessary for the party to whom the child support is due to reduce any such award to judgment in order to recover such interest. The court shall have discretion in applying or waiving past due interest. In determining whether to apply, waive, or reduce the amount of interest owed, the court shall consider whether:

(1) Good cause existed for the nonpayment of the child support;

(2) Payment of the interest would result in substantial and unreasonable hardship for the parent owing the interest;

(3) Applying, waiving, or reducing the interest would enhance or detract from the parent's current ability to pay child support, including the consideration of the regularity of payments made for current child support of those dependents for whom support is owed; and

(4) The waiver or reduction of interest would result in substantial and unreasonable hardship to the parent to whom interest is owed.

(b) Subsection (a) of this Code section shall not be construed to abrogate the authority of the Department of Human Services to waive, reduce, or negotiate a settlement of unreimbursed public assistance in accordance with subsection (b) of Code Section 19-11-5.

(c) Notwithstanding Code Section 7-4-12, 7-4-15, 9-12-10, or 13-6-13, when an award, court order, decree, or judgment for alimony or equitable division of assets and liabilities is payable in installments, interest on such award, court order, decree, or judgment shall not begin to accrue until an installment is 30 days past due unless otherwise ordered by the court.

§ 7-4-13

Every contract shall bear interest according to the law of the place of the contract at the time of the contract, unless upon its face it shall be apparent that the intention of the parties was to adopt the law of another forum; in this case the law of that forum shall govern.

§ 7-4-14

In the absence of an agreement to the contrary, interest shall not run until default; hence, where money can be recovered because of mistake or other like reasons, no interest shall run until after demand and refusal to refund.

§ 7-4-15

All liquidated demands, where by agreement or otherwise the sum to be paid is fixed or certain, bear interest from the time the party shall become liable and bound to pay them; if payable on demand, they shall bear interest from the time of the demand. In case of promissory notes payable on demand, the law presumes a demand instantly and gives interest from date.

§ 7-4-16

Unless otherwise provided in writing signed by the obligor, a commercial account becomes due and payable upon the date a statement of the account is rendered to the obligor. The owner of a commercial account may charge interest on that portion of a commercial account which has been due and payable for 30 days or more at a rate not in excess of 1 1/2 percent per month calculated on the amount owed from the date upon which it became due and payable until paid. “Commercial account” means an obligation for the payment of money arising out of a transaction to sell or furnish, or the sale of, or furnishing of, goods or services other than a “retail installment transaction” as defined in paragraph (10) of subsection (a) of Code Section 10-1-2.

§ 7-4-17

When a payment is made upon any debt, it shall be applied first to the discharge of any interest due at the time, and the balance, if any, shall be applied to the reduction of the principal. If the payment does not extinguish the interest then due, no interest shall be calculated on such balance of interest and interest shall be calculated only on the principal amount up to the time of the next payment. Notwithstanding the foregoing restrictions against charging interest on unpaid interest:

(1) On loans having first priority on real estate and on loans secured by the pledge or assignment of instruments evidencing loans having first priority on real estate, the parties by written contract may lawfully agree that unpaid interest when due shall be added to the unpaid principal balance of the indebtedness and that the increased principal balance of the indebtedness bear interest pursuant to the terms of the contract; and

(2) On loans secured by real estate or secured by real estate and other collateral, the parties by written contract may lawfully agree that, in the event of bankruptcy, the lender or creditor may include interest on its claim pursuant to the terms of the contract.

§ 7-4-18

(a) Any person, company, or corporation who shall reserve, charge, or take for any loan or advance of money, or forbearance to enforce the collection of any sum of money, any rate of interest greater than 5 percent per month, either directly or indirectly, by way of commission for advances, discount, exchange, or the purchase of salary or wages; by notarial or other fees; or by any contract, contrivance, or device whatsoever shall be guilty of a misdemeanor; provided, however, that regularly licensed pawnbrokers, as defined in Code Section 44-12-130, are limited in the amount of interest they may charge only by the limitations set forth in Code Section 44-12-131.

(b) This Code section shall not be construed as repealing or impairing the usury laws now existing but shall be construed as being cumulative thereof.

(c) Nothing contained in Code Section 7-4-2 or 7-4-3 shall be construed to amend or modify the provisions of this Code section.

§ 7-4-19

The Department of Banking and Finance may bring an appropriate civil action to enforce any provision of this chapter whether by injunction or otherwise in any superior court of this state having jurisdiction over one or more defendants.

§ 7-4-20

In enacting Code Sections 7-4-2 through 7-4-5, the General Assembly exercises its prerogative:

(1) Under subsection (b)(2) of Section 501 of the Depository Institutions Deregulation and Monetary Control Act of 1980, Public Law 96-221 (12 U.S.C. Section 1735f-7, notes), and declares that the provisions of subsection (a)(1) of Section 501 do not apply to loans, mortgages, credit sales, and advances made in the State of Georgia on and after March 31, 1983; and

(2) Under Section 512 of that act, Public Law 96-221 (12 U.S.C. Section 86a, notes), and declares that the provisions which preempt the law of this state in Section 511 of that act do not apply to business and agricultural loans in amounts of $1,000.00 or more made in the State of Georgia on and after March 31, 1983.

§ 7-4-21

A claim of violation on any loan secured by an interest in real estate may be asserted in an individual action only and may not be the subject of a class action under Code Section 9-11-23 or any other provisions of law.

Nothing contained in this Code section shall be construed to affect any class action which was pending in any court of this state, including any United States courts, on February 15, 1983, as to the parties to and subject matter then before such court.

Chapter 5 Credit Cards and Credit Card Banks

§ 7-5-1

This chapter shall be known and may be cited as “The Credit Card and Credit Card Bank Act.”

§ 7-5-2

As used in this chapter, the term:

(1) “Affiliate” means the same as that set forth in paragraph (1) of Code Section 7-1-4.

(2) “Commissioner” and “department” shall have the meanings provided in paragraphs (13) and (16) of Code Section 7-1-4.

(3) “Credit card” means any type of arrangement or loan agreement pursuant to which a domestic lender or credit card bank gives a debtor the privilege of using a credit card or other credit confirmation or device of any type in transactions out of which debt arises:

(A) By the domestic lender or credit card bank honoring a draft or similar order for the payment of money created, authorized, issued, or accepted by the debtor; or

(B) By the domestic lender or credit card bank paying or agreeing to pay the debtor's obligation.

(4) “Credit card account” means an arrangement between a domestic lender or credit card bank and a debtor for the creation of debt pursuant to a credit card and under which:

(A) The domestic lender or credit card bank may permit the debtor to create debt from time to time;

(B) The unpaid balance of principal of such debt and the loan, finance, or other appropriate charges are debited to an account;

(C) A loan finance charge is computed or an interest rate imposed upon the outstanding balances of the debtor's account from time to time; and

(D) The domestic lender or credit card bank is to render bills or statements to the debtor at regular intervals, the amount of which bills or statements is payable by and due from the debtor on a specified date as stated in such bill or statement or, at the option of the debtor, but subject to the terms and conditions of the credit card account, may be paid by the debtor in installments.

(5) “Credit card bank” means a national bank located in this state or a bank organized under the laws of this state which, in either event, the activities of which are limited to those permitted under Code Section 7-5-3.

(6) “Domestic lender” means any bank, savings and loan association, savings bank, credit union, or other business organization organized or chartered under the laws of this state or the United States, which in any event is authorized by law to accept deposits and make loans and has its principal place of business in this state.

(7) “Foreign lender” means any bank, savings and loan association, savings bank, credit union, or other business organization organized or chartered under the laws of the United States, or any state other than this state, or the District of Columbia, which in any event is authorized by law to accept deposits and make loans and has its principal place of business outside this state.

(8) “Holding company” means any company that controls a domestic or foreign lender or a credit card bank. The term “company” and “control” shall have the meanings set forth in Code Section 7-1-605.

(9) “Qualifying organization” means a corporation, partnership, or other entity which at all times maintains an office in the State of Georgia at which it employs at least 250 persons residing in this state who are directly or indirectly engaged in providing the following services, either for the qualifying organization or on behalf of other domestic or foreign lenders or credit card banks:

(A) The distribution of credit cards or other devices designed and effective to access credit card accounts;

(B) The preparation of periodic statements of amounts due under credit card accounts;

(D) The maintenance of financial records reflecting the status of such accounts from time to time.

The term “qualifying organization” shall also include any domestic bank and credit card bank satisfying the employment and activities requirements set forth in this paragraph.

§ 7-5-3

Subject to the provisions of this chapter and to the approval of the commissioner, any domestic lender, foreign lender, or holding company may organize, own, and control a credit card bank on the terms and conditions provided in this Code section:

(1) If the credit card bank is to be organized under the laws of this state, such bank shall be organized as provided in Part 8 of Article 2 of Chapter 1 of this title;

(2) In connection with the application to organize, or to own and control a credit card bank, the applicant shall pay applicable fees established by regulation of the department to defray the costs of the investigation and review of the application;

(3) The shares of a credit card bank shall be owned solely by a domestic lender, a foreign lender, or a holding company;

(4) The credit card bank shall conduct its limited deposit taking business only from a single location in this state;

(5) The credit card bank shall at all times maintain capital stock and paid-in surplus as required by regulatory policies of the department but in no event less than $ 2 million;

(6) The credit card bank may only engage in the business of soliciting, processing, and making loans pursuant to credit card accounts and conducting such other activities as may be necessary incidents thereto;

(7) The credit card bank may not accept demand deposits or deposits that the depositor may withdraw by check or similar means for payment to third parties or others, and it may not accept savings or time deposits of less than $ 100,000.00;

(8) The credit card bank must operate in a manner that is not likely to attract customers from the general public in this state to the substantial detriment of other domestic lenders;

(9) The credit card bank shall have, within one year of the date it commences operations, no fewer than 50 employees located in this state devoted to its credit card activities; provided, however, that where the credit card bank contracts with a qualifying organization for the performance of services incidental to offering credit card activities, the minimum number of employees in this state shall be determined by the commissioner at a level to assure the continued and substantive presence of the credit card bank in this state for the purpose of conducting its corporate affairs and performing the credit underwriting function and such other activities not subject to contract with the qualifying organization as may be incidental to its servicing of credit card accounts; and

(10) A domestic lender is not required to establish a credit card bank to issue credit cards and create credit card accounts.

§ 7-5-4

(a)(1) Notwithstanding the provisions of any other law prescribing, regulating, or limiting interest rates, any domestic lender or credit card bank may charge and collect in connection with a credit card account:

(A) Finance charges at such periodic interest rate or rates computed or imposed on the outstanding balances on the credit card account in any manner as provided in the written agreement governing such credit card account, and such periodic interest rate or rates may vary from time to time in accordance with a schedule or formula contained in such agreement; and

(B) Such other fees and charges as the domestic lender or credit card bank and the debtor may agree upon in the written agreement governing the credit card account, including, but not limited to, cash advance charges, charges for exceeding preestablished credit limits, late fees, delinquency or default charges, returned payment charges, stop payment charges, automated teller machine charges or similar electronic or interchange fees or charges, annual or membership fees, application fees, transaction fees and minimum charges for each scheduled billing period, premiums for credit life, accident, health, or loss of income insurance, documentary evidence fees, fees or charges for services rendered or for reimbursement of expenses incurred by any domestic lender or credit card bank or their respective agents in connection with the credit card account, and other fees incident to the application for or the opening, administration, and termination of the credit card account, including, without limitation, commitment, application, and processing fees, official fees and taxes, and costs incurred by reason of examination of title, title insurance, inspection, appraisal, recording, mortgage satisfaction, filing fees, or other formal acts necessary or appropriate to the security for the credit card account.

(2) For the purposes of this Code section, Section 85 of the National Bank Act (12 U.S.C. Section 85), and Sections 521, 522, and 523 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (12 U.S.C. Sections 1831d, 1831e, and 1831f), the finance charges under subparagraph (a)(1)(A) of this Code section and the charges and fees under subparagraph (a)(1)(B) of this Code section shall be deemed to be, and may be charged and collected as, interest by the domestic lender or credit card bank.

(b) The terms and conditions contained in the written agreement governing the credit card account between the domestic lender or credit card bank and the debtor shall be deemed to be material to the determination of interest, including, but not limited to:

(1) Those provisions relating to the computation and charging of finance charges authorized by subparagraph (a)(1)(A) of this Code section;

(2) The fees and charges authorized by subparagraph (a)(1)(B) of this Code section; and

(3) All other terms and conditions of such written agreement.

(c) A credit card account between any domestic lender or credit card bank and a debtor shall be governed solely by the laws of the State of Georgia and federal law unless otherwise expressly agreed in writing by the parties. A domestic lender or credit card bank may, as specified in the written agreement governing a credit card account, modify in any respect any terms or conditions of such credit card account, upon such prior written notice of such modification as specified by the terms of the written agreement governing the credit card account or by the Truth in Lending Act (15 U.S.C. Section 1601, et seq.). Any such notice provided by a domestic lender or credit card bank shall specify that the debtor has the right to surrender the credit card whereupon the debtor shall have the right to continue to pay off his credit card account in the same manner and under the same terms and conditions as then in effect. The debtor's failure to surrender the credit card prior to the modification's becoming effective shall constitute a consent to the modification.

§ 7-5-5

(a) All credit card banks organized under the laws of this state shall be subject to the supervision, regulation, and examination of the department, and the department shall have all enforcement powers with respect thereto as are provided in Chapter 1 of this title.

(b) In the event any credit card bank does not conduct its activities within the limitations provided in Code Section 7-5-3, the department may require such credit card bank to cease all unauthorized activities. In the event such credit card bank fails to abide by such order, the department may in addition to all other rights, remedies, and powers it may have under Chapter 1 of this title:

(1) Impose upon the credit card bank or its parent holding company or domestic lender or foreign lender a penalty of up to $10,000.00 per day for each day such order is violated; and

(2) Require divestiture of such credit card bank by any domestic lender, foreign lender, or holding company not qualified to acquire such credit card bank on the date it ceased to operate within the limitations imposed by Code Section 7-5-3 and became a bank for purposes of Part 18 or Part 19 of Article 2 of Chapter 1 of this title.

§ 7-5-6

(a) A credit card bank shall be subject to the provisions of Chapter 1 of this title except when any rights, powers, privileges, or provisions of Chapter 1 of this title are inconsistent with the rights, powers, privileges, provisions, or limitations of this chapter.

(b) A credit card bank shall not be considered a bank for the purposes of Part 18 or Part 19 of Article 2 of Chapter 1 of this title; provided, however, that every domestic lender, foreign lender, or holding company owning a credit card bank shall be subject to the provisions of Code Section 7-1-607, which concerns registration, reporting, and examination.

Chapter 6 Credit or Loan Discrimination

§ 7-6-1

(a) No bank, lending company, financial institution, retail installment seller, or person extending credit may discriminate or provide requirements which discriminate in the extending of credit or the making of loans solely on the basis of sex, race, religion, national origin, or marital status.

(b) Any person, firm, or corporation which willfully violates any provision of this Code section shall be guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine not to exceed $1,000.00.

§ 7-6-2

Any person denied a loan or credit solely on the basis of discrimination because of sex, race, religion, national origin, or marital status shall have a right to bring an action for damages in any court of competent jurisdiction in an individual, but not in a representative, capacity against the person, firm, or corporation violating this chapter.

Chapter 6A Georgia Fair Lending Act

§ 7-6A-1

This chapter shall be known and may be cited as the “Georgia Fair Lending Act.”

§ 7-6A-2

As used in this chapter, the term:

(1) “Acceleration” means a demand for immediate repayment of the entire balance of a home loan.

(2) “Affiliate” means any company that controls, is controlled by, or is under common control with another company, as set forth in 12 U.S.C. Section 1841, et seq.

(3) “Annual percentage rate” means the annual percentage rate for the loan calculated at closing according to the provisions of 15 U.S.C. Section 1606, the regulations promulgated thereunder by the Board of Governors of the Federal Reserve System, and the Official Staff Commentary on Regulation Z published by the Board of Governors of the Federal Reserve System.

(4) “Bona fide discount points” means loan discount points knowingly paid by the borrower for the express purpose of reducing, and which in fact do result in a bona fide reduction of, the interest rate applicable to the home loan; provided, however, that the undiscounted interest rate for the home loan does not exceed by more than one percentage point the required net yield for a 90 day standard mandatory delivery commitment for a home loan with a reasonably comparable term from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater.

(5) “Borrower” means any natural person obligated to repay the loan including a coborrower or cosigner.

(6) “Creditor” means a person who both regularly extends consumer credit that is subject to a finance charge or is payable by written agreement in more than four installments and is a person to whom the debt arising from the home loan transaction is initially payable. Creditor shall also mean any person brokering a home loan, which shall include any person who directly or indirectly for compensation solicits, processes, places, or negotiates home loans for others or offers to solicit, process, place, or negotiate home loans for others or who closes home loans which may be in the person's own name with funds provided by others and which loans are thereafter assigned to the person providing the funding of such loans, provided that creditor shall not include a person who is an attorney providing legal services in association with the closing of a home loan. A creditor shall not include: (A) a servicer; (B) an assignee; (C) a purchaser; or (D) any state or local housing finance agency or any other state or local governmental or quasi-governmental entity.

(7) “High-cost home loan” means a home loan in which the terms of the loan meet or exceed one or more of the thresholds as defined in paragraph (17) of this Code section.

(8) “Home loan” means a loan, including an open-end credit plan where the principal amount does not exceed the conforming loan size limit for a single-family dwelling as established by the Federal National Mortgage Association and the loan is secured by a mortgage, security deed, or deed to secure debt on real estate located in this state upon which there is located or there is to be located a structure or structures, including a manufactured home, designed principally for occupancy of from one to four families and which is or will be occupied by a borrower as the borrower's principal dwelling, except that home loan shall not include:

(A) A reverse mortgage transaction;

(B) A loan that provides temporary financing for the acquisition of land by the borrower and initial construction of a borrower's dwelling thereon or the initial construction of a borrower's dwelling on land owned by the borrower;

(C) A bridge loan made to a borrower pending the sale of the borrower's principal dwelling or a temporary loan made to a borrower and secured by the borrower's principal dwelling pending the borrower's obtaining permanent financing for such principal dwelling;

(D) A loan secured by personal property including, but not limited to, a motor vehicle, motor home, boat, or watercraft and also secured by the borrower's principal dwelling to provide the borrower with potential income tax advantages when such personal property is the primary collateral for such loan;

(E) A new loan secured by a borrower's principal dwelling as a result of a lien taken in connection with a debt previously contracted or incurred when the loan documents for such new loan do not include a mortgage, security deed, or deed to secure debt expressly securing such new loan; or

(F) A loan primarily for business, agricultural, or commercial purposes.

(9) “Make” or “makes” means to originate a loan or to engage in brokering of a home loan including the soliciting, processing, placing, or negotiating of a home loan made or offered by a person brokering a home loan.

(10) “Manufactured home” means a structure, transportable in one or more sections, which in the traveling mode is eight body feet or more in width or 40 body feet or more in length or, when erected on site is 320 or more square feet and which is built on a permanent chassis and designed to be used as a dwelling with a permanent foundation when erected on land secured in conjunction with the real property on which the manufactured home is located and connected to the required utilities and includes the plumbing, heating, air-conditioning, and electrical systems contained therein; except that such term shall include any structure which meets all the requirements of this paragraph except the size requirements and with respect to which the manufacturer voluntarily files a certification required by the secretary of the United States Department of Housing and Urban Development and complies with the standards established under the National Manufactured Housing Construction and Safety Standards Act of 1974, 42 U.S.C. Section 5401, et seq. Such term does not include rental property or second homes or manufactured homes when not secured in conjunction with the real property on which the manufactured home is located.

(11) “Open-end credit plan” or “open-end loan” means a loan in which (A) a creditor reasonably contemplates repeated transactions; (B) the creditor may impose a finance charge from time to time on an outstanding balance; and (C) the amount of credit that may be extended to the borrower during the term of the loan, up to any limit set by the creditor, is generally made available to the extent that any outstanding balance is repaid.

(12) “Points and fees” means:

(A) All items included in the definition of finance charge in 12 C.F.R. 1026.4(a) and 12 C.F.R. 1026.4(b) except interest or the time price differential. All items excluded under 12 C.F.R. 1026.4(c) are excluded from points and fees, provided that for items under 12 C.F.R. 1026.4(c)(7) the creditor does not receive direct or indirect compensation in connection with the charge and the charge is not paid to an affiliate of the creditor;

(B) All compensation paid directly or indirectly to a mortgage broker from any source, including a broker that originates a loan in its own name in a table funded transaction, including but not limited to yield spread premiums, yield differentials, and service release fees, provided that the portion of any yield spread premium that is both disclosed to the borrower in writing and used to pay bona fide and reasonable fees to a person other than the creditor or an affiliate of the creditor for the following purposes is exempt from inclusion in points and fees: fees for tax payment services; fees for flood certification; fees for pest infestation and flood determination; appraisal fees; fees for inspection performed prior to closing; credit reports; surveys; attorneys' fees, if the borrower has the right to select the attorney from an approved list or otherwise; notary fees; escrow charges, so long as not otherwise included under subparagraph (A) of this paragraph; title insurance premiums; and fire and hazard insurance and flood insurance premiums, provided that the conditions set forth in 12 C.F.R. 1026.4(d)(2) are met;

(C) Premiums or other charges for credit life, credit accident, credit health, credit personal property, or credit loss-of-income insurance, debt suspension coverage or debt cancellation coverage, whether or not such coverage is insurance under applicable law, that provides for cancellation of all or part of a borrower's liability in the event of loss of life, health, personal property, or income or in the case of accident written in connection with a home loan and premiums or other charges for life, accident, health, or loss-of-income insurance without regard to the identity of the ultimate beneficiary of such insurance. In determining points and fees for the purposes of this paragraph, premiums or other charges shall only include those payable at or before loan closing and are included whether they are paid in cash or financed and whether the amount represents the entire premium for the coverage or an initial payment;

(D) The maximum prepayment fees and penalties that may be charged or collected under the terms of the loan documents. Mortgage interest that may accrue in advance of payment in full of a loan made under a local, state, or federal government sponsored mortgage insurance or guaranty program, including a Federal Housing Administration program, shall not be considered to be a prepayment fee or penalty;

(E) All prepayment fees or penalties that are charged to the borrower if the loan refinances a previous loan made or currently held by the same creditor or an affiliate of the creditor;

(F) For open-end loans, points and fees are calculated in the same manner as for loans other than open-end loans, based on the minimum points and fees that a borrower would be required to pay in order to draw on the open-end loan an amount equal to the total credit line; and

(G) Points and fees shall not include:

(i) Taxes, filing fees, recording, and other charges and fees paid or to be paid to public officials for determining the existence of or for perfecting, releasing, or satisfying a security interest;

(ii) Bona fide and reasonable fees paid to a person other than the creditor or an affiliate of the creditor for the following: fees for tax payment services; fees for flood certification; fees for pest infestation and flood determination; appraisal fees; fees for inspections performed prior to closing; credit reports; surveys; attorneys' fees, if the borrower has the right to select the attorney from an approved list or otherwise; notary fees; escrow charges, so long as not otherwise included under subparagraph (A) of this paragraph; title insurance premiums; and fire and hazard insurance and flood insurance premiums, provided that the conditions in 12 C.F.R. 1026.4(d)(2) are met;

(iii) Bona fide fees paid to a federal or state government agency that insures payment of some portion of a home loan, including, but not limited to, the Federal Housing Administration, the Department of Veterans Affairs, the United States Department of Agriculture for rural development loans, or the Georgia Housing and Finance Authority; and

(iv) Notwithstanding any provision to the contrary in this chapter, compensation in the form of premiums, commissions, or similar charges paid to a creditor or any affiliate of a creditor for the sale of: (I) title insurance; or (II) insurance against loss of or damage to property or against liability arising out of the ownership or use of property, provided that the conditions in 12 C.F.R. 1026.4(d)(2) are met.

(13) “Process,” “processes,” or “processing” means to act as a processor.

(14) “Processor” means any person that prepares paperwork necessary for or associated with the closing of a home loan, including but not limited to promissory notes, disclosures, deeds, and closing statements, provided that processor shall not include persons on the grounds that they are engaged in data processing or statement generation services for home loans.

(15) “Servicer” means the same as set forth in 12 C.F.R. 1024.2.

(16) “Servicing” means the same as set forth in 12 C.F.R. 1024.2.

(17) “Threshold” means:

(A) Without regard to whether the loan transaction is or may be a “residential mortgage transaction” as that term is defined in 12 C.F.R. Section 1026.2(a)(24), the annual percentage rate of the loan is such that it equals or exceeds that set out in Section 152 of the Home Ownership and Equity Protection Act of 1994, 15 U.S.C. Section 1602(bb), and the regulations adopted pursuant thereto by the Federal Reserve Board, including 12 C.F.R. Section 1026.32; or

(B) The total points and fees payable in connection with the loan, excluding not more than two bona fide discount points, exceed: (i) 5 percent of the total loan amount if the total loan amount is $20,000.00 or more or (ii) the lesser of 8 percent of the total loan amount or $1,000.00 if the total loan amount is less than $20,000.00.

(18) “Total loan amount” means the amount calculated as set forth in 12 C.F.R. 1026.32(a) and under the Official Staff Commentary of the Board of Governors of the Federal Reserve System. For open-end loans, the total loan amount shall be calculated using the total credit line available under the terms of the home loan as the amount financed.

§ 7-6A-3

All home loans shall be subject to the following limitations and prohibited practices:

(1) No creditor shall make a home loan that finances, directly or indirectly:

(A) Any credit life, credit accident, credit health, credit personal property, or credit loss-of-income insurance, debt suspension coverage, or debt cancellation coverage, whether or not such coverage is insurance under applicable law, that provides for cancellation of all or part of a borrower's liability in the event of loss of life, health, personal property, or income or in the case of accident written in connection with a home loan; or

(B) Any life, accident, health, or loss-of-income insurance without regard to the identity of the ultimate beneficiary of such insurance;

provided, however, that for the purposes of this Code section, any premiums or charges calculated and paid on a monthly basis shall not be considered financed directly or indirectly by the creditor;

(2) No creditor or servicer shall recommend or encourage default on an existing loan or other debt prior to and in connection with the closing or planned closing of a home loan that refinances all or any portion of such existing loan or debt;

(3) No creditor or servicer may charge a borrower a late payment charge unless the loan documents specifically authorize the charge, the charge is not imposed unless the payment is past due for ten days or more, and the charge does not exceed 5 percent of the amount of the late payment. A late payment charge may not be imposed more than once with respect to a particular late payment. If a late payment charge is deducted from a payment made on the home loan and such deduction results in a subsequent default on a subsequent payment, no late payment charge may be imposed for such default. A lender may apply any payment made in the order of maturity to a prior period's payment due even if the result is late payment charges accruing on subsequent payments due; and

(4) No creditor or servicer may charge a fee for informing or transmitting to any person the balance due to pay off a home loan or to provide a release upon prepayment. When such information is provided by facsimile or if it is provided upon request within 60 days of the fulfillment of a previous request, a creditor or servicer may charge a processing fee up to $10.00. Payoff balances shall be provided within a reasonable time but in any event no more than five business days after the request.

§ 7-6A-4

(a) No creditor may knowingly or intentionally engage in the unfair act or practice of “flipping” a home loan. Flipping a home loan is the consummating of a high-cost home loan to a borrower that refinances an existing home loan that was consummated within the prior five years when the new loan does not provide reasonable, tangible net benefit to the borrower considering all of the circumstances including, but not limited to, the terms of both the new and refinanced loans, the cost of the new loan, and the borrower's circumstances.

(b) The home loan refinancing transaction shall be presumed to be a flipping where a high-cost home loan refinances an existing home loan that was consummated within the prior five years and that is a special mortgage originated, subsidized, or guaranteed by or through a state, tribal, or local government or a nonprofit organization, which either bears a below-market interest rate at the time the loan was originated or has nonstandard payment terms beneficial to the borrower, such as payments that vary with income, are limited to a percentage of income, or where no payments are required under specified conditions and where, as a result of the refinancing, the borrower will lose one or more of the benefits of the special mortgage. Notwithstanding any provision to the contrary contained in this chapter, home loan refinancing transactions of first mortgage loans originated by, purchased by, or assigned to the Georgia Housing and Finance Authority shall not be presumed to be a flipping under this subsection.

(c) Notwithstanding any provision to the contrary contained in this chapter regarding costs and attorneys' fees, in any action instituted by a borrower who alleges that the defendant violated this Code section, the borrower shall be entitled to costs and attorneys' fees only if the presiding judge, in the judge's discretion, allows reasonable attorneys' fees and costs to the borrower as prevailing party, such fees and costs to be taxed as a part of the court costs and payable by the losing party upon a finding by the presiding judge that the party charged with the violation has willfully engaged in the act or practice and there was unwarranted refusal by such party to fully resolve the matter which constitutes the basis of such action.

§ 7-6A-5

High-cost home loans shall be subject to the following limitations and prohibited practices:

(1) No prepayment fees or penalties shall be provided for in the loan documents for a high-cost home loan or charged the borrower after the last day of the twenty-fourth month following the loan closing or which exceed in the aggregate:

(A) In the first 12 months after the loan closing, more than 2 percent of the loan amount prepaid; or

(B) In the second 12 months after the loan closing, more than 1 percent of the amount prepaid;

(2) A high-cost home loan shall not contain a scheduled payment that is more than twice as large as the average of earlier scheduled payments. This provision does not apply when the payment schedule is adjusted to the seasonal or irregular income of the borrower;

(3) A high-cost home loan shall not include payment terms under which the outstanding principal balance will increase at any time over the course of the loan because the regular periodic payments do not cover the full amount of interest due;

(4) A high-cost home loan shall not contain a provision that increases the interest rate after default. This provision does not apply to interest rate changes in a variable rate loan otherwise consistent with the provisions of the loan documents, provided that the change in the interest rate is not triggered by the event of default or the acceleration of the indebtedness;

(5) A high-cost home loan shall not include terms under which more than two periodic payments required under the loan are consolidated and paid in advance from the loan proceeds provided to the borrower;

(6) Without regard to whether a borrower is acting individually or on behalf of others similarly situated, any provision of a high-cost home loan agreement that allows a party to require a borrower to assert any claim or defense in a forum that is less convenient, more costly, or more dilatory for the resolution of a dispute than a judicial forum established in this state where the borrower may otherwise properly bring the claim or defense or limits in any way any claim or defense the borrower may have is unconscionable and void;

(7) A creditor shall not make a high-cost home loan without first receiving certification from a counselor with a third-party nonprofit organization approved by the United States Department of Housing and Urban Development or the Georgia Housing and Finance Authority that the borrower has received counseling on the advisability of the loan transaction. No creditor, servicer, or its institution shall be required to contribute to the funding of any nonprofit organization that provides counseling required pursuant to this paragraph;

(8) A creditor shall not make a high-cost home loan unless a reasonable creditor would believe at the time the loan is consummated that the borrower residing in the home will be able to make the scheduled payments associated with the loan based upon a consideration of his or her current and expected income, current obligations, employment status, and other financial resources, other than the borrower's equity in the collateral that secures repayment of the loan. There is a rebuttable presumption that the borrower residing in the home is able to make the scheduled payments to repay the obligation if, at the time the loan is consummated, said borrower's total monthly debts, including amounts under the loan, do not exceed 50 percent of said borrower's monthly gross income as verified by tax returns, payroll receipts, and other third-party income verification;

(9) A creditor or servicer shall not pay a contractor under a home improvement contract from the proceeds of a high-cost home loan unless:

(A) The creditor or servicer is presented with an affidavit of the contractor that the work has been completed, which affidavit meets the requirements of Code Section 44-14-361.2; and

(B) The proceeds are disbursed in an instrument payable to the borrower or jointly to the borrower and the contractor or, at the election of the borrower, through a third-party escrow agent in accordance with terms established in a written agreement signed by the borrower, the drafter of the instrument, and the contractor prior to the disbursement;

(10) A creditor or servicer shall not charge a borrower any fees or other charges to modify, renew, extend, or amend a high-cost home loan or to defer any payment due under the terms of a high-cost home loan;

(11) A creditor who makes a high-cost home loan and who has the legal right to foreclose shall provide notice of the intent to foreclose to the borrower in writing by certified mail, return receipt requested, to the address of the borrower last known to the creditor. Such notice shall be sent to the borrower at least 14 days prior to the publication of the legal advertisement required by Code Section 44-14-162;

(12) If a creditor or servicer asserts that grounds for acceleration of a high-cost home loan exist and requires the payment in full of all sums secured by the security instrument, the borrower or anyone authorized to act on the borrower's behalf shall have the right at any time, up to the time title is transferred by means of foreclosure by judicial proceeding and sale or otherwise, to cure the default and reinstate the high-cost home loan by tendering the total amount of principal, interest, late fees, and escrow deposits in arrears, not including any acceleration. Cure of default as provided in this paragraph shall reinstate the borrower to the same position as if the default had not occurred and shall nullify as of the date of the cure any acceleration of any obligation under the security instrument or note arising from the default;

(13)(A) To cure a default under this Code section, a borrower shall not be required to pay any charge, fee, or penalty attributable to the exercise of the right to cure a default as provided for in this Code section, other than the fees specifically allowed by this Code section. The borrower shall not be liable for any attorneys' fees relating to the borrower's default that are incurred by the creditor or servicer prior to or during the 30 day period set forth in this paragraph, nor for any such fees in excess of $100.00 that are incurred by the creditor or servicer after the expiration of the 30 day period but prior to the time the creditor or servicer files a foreclosure action or takes other action to seize or transfer ownership of the home. After the creditor or servicer files a foreclosure action or takes other action to seize or transfer ownership of the home, the borrower shall only be liable for attorneys' fees that are reasonable and actually incurred by the creditor or servicer based on a reasonable hourly rate and a reasonable number of hours plus any other reasonable and necessary expenses incurred by the creditor or servicer.

(B) If a default is cured prior to the initiation of any action to foreclose or to seize or transfer a home, the creditor or servicer shall not institute the foreclosure proceeding or other action for that default. If a default is cured after the initiation of any action to foreclose, the creditor or servicer shall take such steps as are necessary to terminate the foreclosure proceeding or other action.

(C) Before any action is filed to foreclose upon the home or other action is taken to seize or transfer ownership of a home, a notice of the right to cure the default must be delivered to the borrower informing the borrower of the following:

(i) The nature of the default claimed on the high-cost home loan and of the borrower's right to cure the default by paying the sum of money required to cure the default. If the amount necessary to cure the default will change during the 30 day period after the effective date of the notice due to the application of a daily interest rate or the addition of late fees as allowed by this chapter, the notice shall give sufficient information to enable the borrower to calculate the amount at any point during the 30 day period;

(ii) The date by which the borrower shall cure the default to avoid acceleration and initiation of foreclosure or other action to seize the home which date shall not be less than 30 days after the date the notice is effective and the name and address and phone number of a person to whom the payment or tender shall be made;

(iii) That, if the borrower does not cure the default by the date specified, the creditor or servicer may take steps to terminate the borrower's ownership in the property by commencing a foreclosure proceeding or other action to seize the home; and

(iv) The name and address of the creditor or servicer and the telephone number of a representative of the creditor or servicer whom the borrower may contact if the borrower disagrees with the creditor's or servicer's assertion that a default has occurred or the correctness of the creditor's or servicer's calculation of the amount required to cure the default;

(14) A high-cost home loan shall not contain nor shall a creditor or servicer enforce a provision that permits a creditor or servicer, in its sole discretion, to accelerate the indebtedness. This paragraph does not prohibit acceleration of the loan in good faith due to the borrower's failure to abide by the material terms of the loan; and

(15) All high-cost home loan documents that create a debt or pledge property as collateral shall contain the following notice on the first page in a conspicuous manner: “Notice: This is a mortgage subject to special rules under the ‘Georgia Fair Lending Act.’ Purchasers or assignees of this mortgage may be liable for all claims and defenses by the borrower with respect to the mortgage.”

§ 7-6A-6

(a) Notwithstanding any other provision of law, where a home loan was made, arranged, or assigned by a person selling home improvements to the dwelling of a borrower, the borrower may assert against the creditor all affirmative claims and any defenses that the borrower may have against the seller or home improvement contractor, provided that this subsection shall not apply to loans other than high-cost home loans unless applicable law requires a certificate of occupancy, inspection, or completion to be obtained and said certificate is not obtained.

(b) Notwithstanding any other provision of law, any person who purchases, is assigned, or otherwise becomes a holder of a high-cost home loan shall be subject to all affirmative claims and any defenses with respect to the high-cost home loan that the borrower could assert against the creditor of the high-cost home loan, unless the purchaser or holder demonstrates, by a preponderance of the evidence, that the purchaser or holder exercised reasonable due diligence at the time of purchase of the home loans, or within a reasonable time thereafter, intended to prevent the purchaser or holder from purchasing or taking assignment of high-cost home loans.

(1) May be asserted by the borrower only in an individual action and shall not exceed the sum of the amount of all remaining indebtedness of the borrower under such loan and reasonable attorneys' fees in such individual action;

(2) May be sought by the borrower of a high-cost home loan after notice of acceleration or foreclosure of the high-cost home loan, asserting a violation of Code Section 7-6A-4 or 7-6A-5 in an individual action to enjoin foreclosure or to preserve or obtain possession of the home secured by the high-cost home loan; and

(3) Must be brought within one year from the date of the occurrence of the violation; provided, however, a borrower shall not be barred from asserting a violation of Code Section 7-6A-5 in an action to collect the debt which was brought more than one year from the date of the occurrence of such a violation as a matter of defense by recoupment or set-off in such action except as otherwise provided by law.

(d) It shall be a violation of this chapter for any person to attempt in bad faith to avoid the application of this chapter by dividing any loan transaction into separate parts or structuring a home loan transaction as an open-end loan for the purpose of evading the provisions of this chapter when the loan would have been a high-cost home loan if the loan had been structured as a closed-end loan or engaging in any other subterfuge with the intent of evading any provision of this chapter.

§ 7-6A-7

(a) Any creditor found by a preponderance of the evidence to have violated this chapter shall be liable to the borrower for the following:

(1) Actual damages, including consequential and incidental damages;

(2) Statutory damages equal to the recovery of two times the interest paid under the loan and forfeiture of interest under the loan for any violation of paragraph (1) or (2) of Code Section 7-6A-3, any violation of Code Section 7-6A-4, or any violation of Code Section 7-6A-5;

(3) Punitive damages subject to Code Section 51-12-5.1; and

(4) Costs and reasonable attorneys' fees.

(b) A borrower may be granted injunctive, declaratory, and such other equitable relief as the court deems appropriate in an action to enforce compliance with this chapter including, but not limited to, the following:

(1) Notwithstanding any other provision of law, a court shall have the discretion not to require a borrower of a high-cost home loan seeking injunctive or other equitable relief under the provisions of this chapter to make a tender upon a showing that the borrower has a reasonable likelihood of being successful on the merits. When tender is not required by the court, upon application to the court by the creditor, the court shall require the borrower to pay into the registry of the court all regularly scheduled home loan payments including property taxes and homeowners hazard insurance premiums if required by escrow agreement which are the responsibility of the borrower payable to the creditor or servicer under the terms of the home loan agreement which become due after the filing of the legal action, said home loan payments to be paid as such become due, and such other expenses provided under the home loan agreement as the court may deem just, provided that regularly scheduled payments shall not include any payments allegedly due under any acceleration provision of the home loan. If the creditor or servicer and the borrower disagree as to the amount of the home loan payments due, either or both of them may submit to the court any written home loan agreement for the purpose of establishing the amount of home loan payments to be paid into the registry of the court;

(2) If the borrower should fail to make any regularly scheduled payment under a high-cost home loan as it becomes due after the filing of this action, upon application to the court by the creditor or servicer, the court may issue an order denying the borrower's petition for injunctive or other equitable relief, and vacating any decree for injunctive or equitable relief previously entered by the court; and

(3) The court shall order the clerk of the court to pay to the creditor or any person the creditor may designate the payments claimed under the high-cost home loan agreement paid into the registry of the court as said payments are made; provided, however, that, if the borrower claims that he or she is entitled to all or any part of the funds and such claim is an issue of controversy in the litigation, the court shall order the clerk to pay to the creditor or any person the creditor may designate without delay only that portion of the funds to which the borrower has made no claim in the proceedings or may make such other order as is appropriate under the circumstances. That part of the funds which is a matter of controversy in the litigation shall remain in the registry of the court until a determination of the issues by the trial court. If either party appeals the decision of the trial court, that part of the funds equal to any sums found by the trial court to be due from the creditor or servicer to the borrower shall remain in the registry of the court until a final determination of the issues. The court shall order the clerk to pay to the creditor or any person the creditor may designate without delay the remaining funds in court and all payments of future home loan payments made into court pursuant to paragraph (1) of this subsection unless the borrower can show good cause that some or all of such payments should remain in court pending a final determination of the issues.

(d) Any violation of this chapter may be enforced pursuant to Code Section 9-11-23.

(e) The right of rescission granted and defined under 15 U.S.C. Section 1601, et seq., and a right of rescission for any violation of paragraph (1) or (2) of Code Section 7-6A-3, any violation of Code Section 7-6A-4, or any violation of Code Section 7-6A-5 shall be available to a borrower of a high-cost home loan at any time during the term of the loan not to exceed a period of five years after the consummation of the loan.

(f) The brokering of a home loan by a broker registered or licensed or required to be registered or licensed as a broker under the laws of this state or any other jurisdiction that violates the provisions of this chapter shall constitute a violation of such provisions.

(g) Without regard to whether a borrower is acting individually or on behalf of others similarly situated, any provision of a home loan agreement that allows a party to require a borrower to assert any claim or defense in a forum that is less convenient, more costly, or more dilatory for the resolution of a dispute than a judicial forum established in this state where the borrower may otherwise properly bring the claim or defense or limits in any way any claim or defense the borrower may have is unconscionable and void.

(h) An action under this chapter may be brought within five years after the date of the first scheduled payment by the borrower under the home loan.

(i) The remedies provided in this chapter are not intended to be the exclusive remedies available to a borrower nor must the borrower exhaust any administrative remedies provided under this chapter or any other applicable law before proceeding under this Code section.

§ 7-6A-8

(a) The Attorney General, the district attorneys of this state, and the commissioner of banking and finance shall have jurisdiction to enforce this chapter through their general regulatory powers and through civil process. The Commissioner of Insurance shall have like authority to enforce paragraph (1) of Code Section 7-6A-3.

(b) Any person, including members, officers, and directors of a creditor, who knowingly violates this chapter is guilty of a misdemeanor and, on conviction, is subject to a fine not exceeding $1,000.00 for each violation or to imprisonment not exceeding six months, or both.

§ 7-6A-9

A creditor or servicer or an insurer providing insurance through premiums financed by a creditor of a home loan who, when acting in good faith, fails to comply with the provisions of this chapter will not be deemed to have violated this chapter if the creditor or servicer or insurer providing insurance through premiums financed by a creditor establishes that either:

(1) Within 90 days of the loan closing and prior to receiving any notice from the borrower of the compliance failure, (A) the creditor or servicer has offered appropriate restitution to the borrower and appropriate adjustments are made to the loan or (B) to correct a compliance failure of paragraph (1) of Code Section 7-6A-3, an insurer providing insurance through premiums financed by a creditor may provide appropriate restitution to the borrower by returning premiums paid plus interest charged on the premiums to the borrower upon receipt of notice of the compliance failure; or

(2) Within 90 days of discovering a compliance failure and prior to receiving any notice of the compliance failure and the compliance failure was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid such errors, the borrower is notified of the compliance failure, appropriate restitution is offered to the borrower, and appropriate adjustments are made to the loan. Examples of a bona fide error include clerical, calculation, computer malfunction and programming, and printing errors. An error of legal judgment with respect to a person's obligations under this chapter is not a bona fide error.

§ 7-6A-10

The provisions of this chapter shall be severable and, if any phrase, clause, sentence, or provision is declared to be invalid or is preempted by federal law or regulation, the validity of the remainder of this chapter shall not be affected thereby. If any provision of this chapter is declared to be inapplicable to any category of persons or any specific category, type, or kind of loan or portions thereof, the provisions of this chapter shall nonetheless continue to apply with respect to all other persons and all other loans or portions thereof.

§ 7-6A-11

No municipality or county shall enact any ordinance or law that regulates the terms of home loans or that makes the eligibility of any person or entity to do business with the municipality or county dependent upon the terms of home loans originated or serviced by such person or entity.

§ 7-6A-12

The provisions of this chapter shall not apply to any bank, trust company, savings and loan, savings bank, credit union, or subsidiary thereof, respectively, that is chartered under the laws of this state or any other state only to the extent federal law precludes or preempts or has been determined to preclude or preempt the application of the provisions of this chapter to any federally chartered bank, trust company, savings and loan, savings bank, or credit union, respectively, and such federal preclusion or preemption shall apply only to the same type of state chartered entity as the federally chartered entity affected; provided, however, that the provisions of this chapter, including subsection (f) of Code Section 7-6A-7, shall be applicable to an independent mortgage broker for any loan originated or brokered by the broker that is initially funded by any state or federally chartered bank, trust company, savings and loan, savings bank, or credit union.

§ 7-6A-13

Without limitations on the power conferred by Chapter 1 of this title, the Department of Banking and Finance shall have the authority to promulgate rules and regulations not inconsistent with law for the enforcement of this chapter to effectuate the purposes of this chapter and to clarify the meaning of terms. In complying with this chapter, a creditor's good faith reliance on any formal or informal written guidance of the Department of Banking and Finance previously made available to the general public shall constitute prima-facie evidence of compliance with this chapter. The provisions of this Code section shall apply even if, following the reliance, such guidance is amended, rescinded, or determined by any judicial or other authority to be invalid.

Chapter 7 Loan Brokers

§ 7-7-1

As used in this chapter, the term:

(1) “Advance fee” means any consideration which is assessed or collected, prior to the closing of a loan, by a loan broker.

(2) “Borrower” means a person obtaining or desiring to obtain a loan of money, a credit card, or a line of credit.

(3) “Loan broker” means any person, firm, or corporation who does not operate or maintain an office that is open regularly to the public for the transaction of business and where potential borrowers actually visit to transact, discuss, or negotiate potential loans and:

(A) For or in expectation of consideration, arranges or attempts to arrange or offers to fund a loan of money, a credit card, or a line of credit;

(B) For or in expectation of consideration, assists or advises a borrower in obtaining or attempting to obtain a loan of money, a credit card, a line of credit, or related guarantee, enhancement, or collateral of any kind or nature;

(D) Holds himself out as a loan broker.

“Loan broker” does not include any regulated lender or any third party soliciting borrowers for a regulated lender pursuant to a written contract with the regulated lender or any mortgage banker or mortgage broker approved by a regulated lender or the federal Department of Housing and Urban Development, the Veterans' Administration, the Federal National Mortgage Corporation, or the Federal Home Loan Mortgage Corporation.

(4) “Mortgage” means any indebtedness secured by a mortgage, deed of trust, security deed, or other lien on real property.

(5) “Mortgage banker” means any person who in the regular course of business:

(A) Holds himself out as being able to make mortgage loans;

(B) Holds himself out as being able to service mortgage loans; or

(6) “Mortgage broker” means any person who in the regular course of business for compensation or gain or in the expectation of compensation or gain holds himself out as being able to assist a person in obtaining a mortgage loan.

(7) “Principal” means any officer, director, partner, joint venturer, branch manager, or other person with similar managerial or supervisory responsibilities for a loan broker.

(8) “Regulated lender” means any person, firm, corporation, or subsidiary thereof that is licensed by and subject to regulation or supervision of any agency of the United States or this state and is acting within the scope of the license.

§ 7-7-2

No loan broker shall:

(1) Engage in unfair or deceptive acts or practices that are declared to be unlawful by Part 2 of Article 15 of Chapter 1 of Title 10, the “Fair Business Practices Act of 1975”;

(2) Assess, collect, or solicit an advance fee from a borrower to provide services as a loan broker; provided, however, that nothing contained in this paragraph shall preclude a loan broker from soliciting a potential borrower to pay for or preclude a potential borrower from paying for actual services necessary to apply for a loan, including but not limited to a credit check or an appraisal of security where such payment is made by check or money order payable to a party independent of the loan broker;

(3) Make or use any false or misleading representations or omit any material fact in the offer or sale of the services of a loan broker or engage, directly or indirectly, in any act that operates or would operate as fraud or deception upon any person in connection with the offer or sale of the services of a loan broker, notwithstanding the absence of reliance by the buyer;

(4) Make or use any false or deceptive representation in its business dealings or to the department or conceal a material fact from the department; or

(5) Offer the services of a loan broker by making, publishing, disseminating, circulating, or placing before the public within this state an advertisement in a newspaper or other publication or an advertisement in the form of a book, notice, handbill, poster, sign, billboard, bill, circular, pamphlet, letter, photograph, or motion picture or an advertisement circulated by radio, loud-speaker, telephone, television, telegraph, or in any other way, where said offer or advertisement does not disclose the name, business address, and telephone number of the loan broker. For purposes of this Code section, the loan broker shall disclose the actual address and telephone number of the business of the loan broker in addition to the address and telephone number of any forwarding service that the loan broker may use.

§ 7-7-3

Each principal of a loan broker may be sanctioned for the actions of the loan broker, including its agents or employees, in the course of business of the loan broker.

§ 7-7-4

(a) Any borrower injured by a violation of this chapter may bring civil action in a court of competent jurisdiction for recovery of damages. Judgment shall be entered for actual damages and in no case shall be less than the amount paid by the borrower to the loan broker, plus reasonable attorney's fees and costs. An award may also be entered for punitive damages.

(b) Any borrower injured by a violation of this chapter may bring an action against the surety bond or trust account, if any, of the loan broker.

(c) The remedies provided under this chapter are in addition to any other procedures or remedies for any violation or conduct provided for in any other law.

§ 7-7-5

A loan broker may not by contract, agreement, or otherwise limit the operation of this chapter, notwithstanding any other provision of law.

§ 7-7-6

Any person who violates any provision of this chapter shall be guilty of a felony and upon conviction shall be subject to a fine not to exceed $5,000.00 or by imprisonment for not less than one nor more than five years, or both.

Chapter 8 Safe Use of Remote Service Terminals

§ 7-8-1

As used in this chapter, the term:

(1) “Access area” means any paved walkway or sidewalk which is within 50 feet of any remote service terminal. The term does not include any street or highway open to the use of the public or any adjacent sidewalk.

(2) “Access device” shall have the same meaning as set forth in Federal Reserve Board Regulation E, 12 C.F.R. Part 205, promulgated pursuant to the federal Electronic Fund Transfer Act, 15 U.S.C. Section 1601, et seq.

(3) “Candlefoot power” means the light intensity of candles on a horizontal plane at 36 inches above ground level and five feet in front of the area to be measured.

(4) “Control” of an access area or defined parking area means to have the present authority to determine how, when, and by whom such access area or defined parking area is to be used, maintained, lighted, and landscaped.

(5) “Customer” means a natural person to whom an access device has been issued for personal, family, or household use.

(6) “Defined parking area” means that portion of any parking area open for customer parking which is:

(A) Contiguous to an access area with respect to a remote service terminal;

(B) Regularly, principally, and lawfully used for parking by users of the remote service terminal while conducting remote service terminal transactions during the hours of darkness; and

(C) Owned or leased by the operator of the remote service terminal or owned or controlled by the party leasing the remote service terminal site to the operator.

The term does not include any parking area which is not open or regularly used for parking by users of the remote service terminal who are conducting remote service terminal transactions during the hours of darkness. A parking area is not open if it is physically closed to access or if conspicuous signs indicate that it is closed. If a multiple-level parking area satisfies the conditions of this paragraph and would therefore otherwise be a defined parking area, only the single parking level deemed by the operator of the remote service terminal to be the most directly accessible to the users of the remote service terminal shall be a defined parking area.

(7) “Financial institution” means such an institution as defined in Code Section 7-1-4.

(8) “Hours of darkness” means the period that commences 30 minutes after sunset and ends 30 minutes before sunrise.

(9) “Operator” means any bank, savings association, credit union, savings bank, or other business entity or any person who operates a remote service terminal, but does not include any person or entity whose primary function is to provide for the exchange, transfer, or dissemination of electronic fund transfer data.

(10) “Owner of an automated teller machine” means the person having the right to determine the financial institutions which will be permitted to use, or participate in the usage of, the automated teller machine but does not include any person or entity whose primary function is to provide for the exchange, transfer, or dissemination of electronic fund transfer data.

(11) “Public road” means any public right of way, including, but not limited to, structures, sidewalks, facilities, and appurtenances incidental thereto.

(12) “Remote service terminal” means any electronic information processing device which accepts or dispenses cash in connection with a credit, deposit, or convenience account. The term does not include devices used solely to facilitate check guarantees or check authorizations or which are used in connection with the acceptance or dispensing of cash on a person-to-person basis, such as by store cashier.

§ 7-8-2

(a) On or before July 1, 1994, with respect to all existing installed remote service terminals in this state, and any remote service terminals installed after July 1, 1993, the operator shall adopt procedures for evaluating the safety of the remote service terminals. These procedures shall include a consideration of the following:

(1) The extent to which the lighting for the remote service terminal complies or will comply with applicable standards;

(2) The presence of landscaping, vegetation, or other obstructions in the area of the remote service terminal, the access area, and the defined parking area; and

(3) The incidence of crimes of violence in the immediate neighborhood of the remote service terminal as reflected in the records of the local law enforcement agency and of which the operator has actual knowledge.

(b) It is not the intent of the General Assembly in enacting this chapter to impose a duty to relocate or modify remote service terminals upon the occurrence of any particular events or circumstances, but rather to establish a standard of good faith for the evaluation of all remote service terminals as provided in this chapter. A violation of the provisions of this chapter or any regulation made pursuant thereto will not constitute negligence per se.

§ 7-8-3

(a) Each operator of a remote service terminal installed on or after July 1, 1993, shall comply with the provisions of this chapter commencing on the date the remote service terminal is installed. Compliance with the provisions of this chapter by operators as to remote service terminals existing as of July 1, 1993, shall be optional until July 1, 1994, and mandatory thereafter. This Code section shall apply to an operator of a remote service terminal only to the extent that the operator controls the access area or defined parking area to be lighted.

(b) If an access area or defined parking area is not controlled by the operator of the remote service terminal, and if the person who leased the remote service terminal site to the operator controls the access area or defined parking area, the person who controls the access area or defined parking area shall comply with the provisions of this chapter as to any remote service terminals installed on or after July 1, 1994, commencing on the date the remote service terminal is installed and as to any remote service terminal existing as of July 1, 1993, commencing no later than on July 1, 1994.

(c) The operator, owner, or other person responsible for the remote service terminal shall provide lighting during the hours of darkness with respect to an open and operating remote service terminal and any defined parking area, access area, and the exterior of an enclosed remote service terminal installation according to the following standards:

(1) There shall be a minimum of ten candlefoot power at the face of the remote service terminal and extending in an unobstructed direction outward five feet;

(2) There shall be a minimum of two candlefoot power within 50 feet from all unobstructed directions from the face of the remote service terminal. In the event the remote service terminal is located within ten feet of the corner of the building and the remote service terminal is generally accessible from the adjacent side, there shall be a minimum of two candlefoot power along the first 40 unobstructed feet of the adjacent side of the building; and

(3) There shall be a minimum of two candlefoot power in that portion of the defined parking area within 60 feet of the remote service terminal.

§ 7-8-4

Customers receiving access devices shall be furnished by the respective issuers thereof with notices of basic safety precautions which customers should employ while using a remote service terminal. This information shall be furnished by personally delivering or mailing the information to each customer whose mailing address as to the account to which the access device relates is in this state. This information shall be furnished with respect to access devices issued on or after July 1, 1994, at or before the time the customer is furnished with his or her access device. With respect to a customer to whom an access device has been issued prior to July 1, 1993, the information shall be delivered on or before July 1, 1994. Only one notice need be furnished per household, and if access devices are furnished to more than one customer for a single account or set of accounts or on the basis of a single application or other request for access devices, only a single notice need be furnished in satisfaction of the notification responsibilities as to those customers. The information may be included with other disclosures related to the access device furnished to the customer, such as with any initial or periodic disclosure statement furnished pursuant to the federal Electronic Fund Transfer Act. 1

1 15 U.S.C.A. § 1693 et seq.

§ 7-8-5

The provisions of this chapter shall not apply to any remote service terminal which is located:

(1) Inside a building, unless it is a freestanding installation which exists for the sole purpose of providing an enclosure for the remote service terminal;

(2) Inside a building, except to the extent a transaction can be conducted from outside the building; or

(3) In any area, including any access area, building, enclosed space, or parking area, which is not controlled by the operator.

§ 7-8-6

The commissioner of the Department of Banking and Finance is empowered to enforce the provisions of this chapter and is empowered to make all necessary rules and regulations for the purpose of carrying out the purposes of this chapter.

§ 7-8-7

The provisions of this chapter shall not be construed to create any duty, responsibility, or obligation for any person or entity whose primary function is to provide for the exchange, transfer, or dissemination of electronic fund transfer data and is not otherwise a financial depository institution or an operator, as defined in this chapter, and such person or entity shall have no liability of any nature to any customer or user of a remote service terminal and shall not be named in any action by a customer or user of a remote service terminal for any claim concerning any provision of this chapter or relating to the use or attempted use of a remote service terminal.

§ 7-8-8

This chapter supersedes and preempts all rules, regulations, codes, statutes, or ordinances of all cities, counties, consolidated cities and counties, municipalities, and local agencies regarding customer safety at remote service terminals.

Chapter 9 Georgia Merchant Acquirer Limited Purpose Bank

§ 7-9-1

This chapter shall be known and may be cited as the “Georgia Merchant Acquirer Limited Purpose Bank Act.”

§ 7-9-2

As used in this chapter, the term:

(1) “Commissioner” means the commissioner of banking and finance.

(1.1) “Control person” means any individual who directs the affairs or controls or establishes policy for a merchant acquirer limited purpose bank.

(2) “Corporation” means a corporation organized under the laws of this state, the United States, or any other state, territory, or dependency of the United States or under the laws of a foreign country.

(3) “Department” means the Department of Banking and Finance.

(4) “Eligible organization” means a corporation that at all times maintains an office in the State of Georgia at which it or its parent, affiliates, or subsidiaries employ at least 250 persons residing in this state who are directly or indirectly engaged in merchant acquiring activities or settlement activities, including providing the following services related to merchant acquiring activities or settlement activities, either for the eligible organization or on behalf of others:

(A) Administrative support;

(B) Information technology support;

(D) Tax and finance support.

(5) “Holding company” means any company that controls a merchant acquirer limited purpose bank. For purposes of this paragraph, the terms “company” and “control” shall have the meanings set forth in Code Section 7-1-605.

(6) “Merchant” means an individual or entity authorized by a payment card network to accept payments in exchange for goods or services.

(7) “Merchant acquirer limited purpose bank” means a corporation organized under this chapter and the activities of which are limited to those permitted under Code Section 7-9-12.

(8) “Merchant acquiring activities” means the various activities associated with effecting transactions within payment card networks, including obtaining and maintaining membership in one or more payment card networks; signing up and underwriting merchants to accept payment card network branded payment cards; providing the means to authorize valid card transactions at client merchant locations; facilitating the clearing and settlement of the transactions through a payment card network; providing access to one or more payment card networks to merchant acquirer limited purpose bank affiliates, customers, or customers of its affiliates; sponsoring the participation of merchant acquirer limited purpose bank affiliates, customers, or customers of its affiliates in one or more payment card networks; and conducting such other activities as may be necessary, convenient, or incidental to effecting transactions within payment card networks.

(8.1) “Merchant funds” means funds received by a merchant acquirer limited purpose bank as a result of its performance of clearing, settlement, or any other authorized activities which are ultimately payable to a merchant.

(9) “Payment card network” means any organization, group, system, or other collection of individuals or entities that is organized to allow participants to accept or make payments for goods or services using a credit card, debit card, or any other payment device.

(10) “Self-acquiring activities” means the act of a merchant, for itself or through an affiliated entity, engaging in merchant acquiring or settlement activities on its own behalf for payments it, or its affiliated entity, receives for goods and services it, or its affiliated entity, provides to consumers.

(11) “Settlement activities” means the processing of payment card transactions to send to a payment card network for processing, to make payments to a merchant, and, ultimately, for cardholder billing.

§ 7-9-3

A corporation that performs merchant acquiring activities or settlement activities in this state may elect to obtain a charter from the department. Those corporations chartered by the department shall be subject to the provisions of this chapter and any rules and regulations adopted by the department for purposes of regulating chartered merchant acquirer limited purpose banks. The department shall have no authority to regulate a corporation performing merchant acquiring activities or settlement activities that has not been chartered by the department.

§ 7-9-4

(a) A corporation that seeks to be chartered shall file an application with the department and shall pay applicable fees established by regulation of the department to defray the costs of the investigation and review of the application.

(b) The department shall, by regulation, prescribe annual examination fees, charter fees, registration fees, and supervision fees to be paid by each merchant acquirer limited purpose bank. In addition, the department may, by regulation, prescribe reasonable application and related fees, special investigation fees, hearing fees, and fees to provide copies of any book, account, report, or other paper filed in its office or for any certification thereof or for processing any papers as required by this title. The department, in its discretion, may require the payment of such fees in any manner deemed to be efficient, including collection through automated clearing-house arrangements or other electronic means, so that the state receives funds no later than the date the payment is required to be made. The department is authorized to net the fees authorized in this subsection to recover any costs incurred by the department related to any investigation or examination of a merchant acquirer limited purpose bank.

(c) The merchant acquirer limited purpose bank shall have, within one year after the date it receives its charter, no fewer than 50 employees located in this state devoted to merchant acquiring activities; provided, however, that a merchant acquirer limited purpose bank may contract with an eligible organization for the performance of merchant acquiring activities, settlement activities, or any of the other services identified in paragraph (4) of Code Section 7-9-2, and when a merchant acquirer limited purpose bank enters into such contracts with an eligible organization for merchant acquiring activities, settlement activities, or any other services identified in paragraph (4) of Code Section 7-9-2, the minimum number of employees in this state shall be determined by the commissioner at a level to assure the continued and substantive presence of the merchant acquirer limited purpose bank in this state for the purpose of conducting its corporate affairs and operations. If a merchant acquirer limited purpose bank contracts with an eligible organization that is an affiliate of the merchant acquirer limited purpose bank, the commissioner shall consider the eligible organization’s or its parent’s, affiliates’, or subsidiaries' employees engaged on behalf of the merchant acquirer limited purpose bank as employees of the merchant acquirer limited purpose bank for purposes of complying with this subsection.

§ 7-9-5

(a) A merchant acquirer limited purpose bank shall have articles of incorporation signed by the incorporator and shall set forth in the English language:

(1) The name of the merchant acquirer limited purpose bank;

(2) The street address and county where the main office will be located;

(3) The name of the initial registered agent;

(4) The street address where its initial registered office will be located;

(5) A statement that “This corporation is subject to the ‘Georgia Merchant Acquirer Limited Purpose Bank Act’ ”;

(6) The aggregate number of shares which the merchant acquirer limited purpose bank shall have authority to issue, and:

(A) If the shares are to consist of one class only, the par value of each of the shares; or

(7) The term for which the merchant acquirer limited purpose bank is to exist, which shall be perpetual unless otherwise limited; and

(8) Any provision not inconsistent with law which the incorporators may choose to include for the regulation of the internal affairs and business of the merchant acquirer limited purpose bank.

(b) It shall not be necessary to set forth in the articles of incorporation any of the corporate or operational powers set forth in this chapter.

(c) The applicant shall file with the department the articles of incorporation, together with any fee required by the department. Such filing shall constitute an application for a charter and approval to operate as a merchant acquirer limited purpose bank. Immediately upon the filing of the articles of incorporation, the department shall certify a copy of the articles and return it to the applicant, who shall, in conformity with Code Section 7-1-7 and on the next business day following the filing of the articles, transmit for publication in the newspaper which is the official organ of the county where the merchant acquirer limited purpose bank will be located a copy of the articles or, in lieu thereof, a statement that reads substantially as follows:

“An application for a charter to operate as a merchant acquirer limited purpose bank to be known as the __________ and to be located at __________ in __________ County, Georgia, will be made to the Secretary of State of Georgia in accordance with Chapter 9 of Title 7 of the Official Code of Georgia Annotated, the ‘Georgia Merchant Acquirer Limited Purpose Bank Act.’ A copy of the articles of incorporation of the proposed merchant acquirer limited purpose bank and the application have been filed with the Department of Banking and Finance.”

The articles of incorporation or the statement must be published once a week for two consecutive weeks with the first publication occurring within ten days of receipt by the newspaper of the articles of incorporation or statement.

(d) Each merchant acquirer limited purpose bank shall name a registered agent and inform the department and the Secretary of State of its current registered agent.

(e) The administration of business and affairs of a merchant acquirer limited purpose bank shall be the responsibility of a board of directors consisting of at least three directors, a majority of whom shall be residents of this state.

§ 7-9-5.1

(a) The board of directors shall hold regular meetings at such times as may be fixed by the bylaws and shall, at all times, be subject to call by the chairperson of the board, the chief executive officer, the president, or any two members of the board. The board shall meet at least once in ten different months of each calendar year unless an alternative schedule is approved in writing by the department, but in no event shall the board meet less frequently than once in each calendar quarter.

(b) Unless otherwise provided in the articles or bylaws:

(2) The board of directors may designate by resolution three or more of its number to constitute an executive committee or other committee which, to the extent provided in such resolution, shall have and exercise the authority of the board of directors in regard to the business of the merchant acquirer limited purpose bank; and

§ 7-9-5.2

The board of directors shall have the power to adopt, amend, or repeal bylaws governing the regulation and management of affairs of the merchant acquirer limited purpose bank unless such power is reserved exclusively to the shareholders by the articles or bylaws previously adopted by shareholders; provided, however, that any bylaws adopted by the board of directors may be altered, amended, or repealed and new bylaws adopted by shareholders. Shareholders may prescribe that any bylaw or bylaws adopted shall not be altered, amended, or repealed by the board of directors. Copies of the bylaws and any change, addition, or amendment thereto shall be filed with the department immediately upon adoption by the directors or the shareholders.

§ 7-9-5.3

(a) A merchant acquirer limited purpose bank shall maintain a chief executive officer, chief information officer, chief risk officer, and such other officers the department may require by rule or regulation. A person may hold more than one office; provided, however, that no person shall serve as both chief executive officer and chief risk officer.

(b) Except as otherwise provided for in the articles or bylaws, the board of directors shall elect officers, fix their compensation, and fill vacancies. An officer elected or appointed by the board may be removed without prejudice to any contract right of such officer upon determination by the board that such removal is in the best interests of the merchant acquirer limited purpose bank. The merchant acquirer limited purpose bank shall immediately notify the department in writing upon a change in the position of chief executive officer or president.

(c) Officers of a merchant acquirer limited purpose bank shall have such authority and perform such duties as provided for in the bylaws adopted by the board.

(d) A merchant acquirer limited purpose bank may employ such agents or employees as necessary for the prompt and orderly discharge of its business.

§ 7-9-5.4

(a) Prior to assuming office, each director shall take an oath or affirmation that he or she will diligently and honestly perform his or her duties in the administration of the affairs of the merchant acquirer limited purpose bank; he or she will not permit a willful violation of law by the merchant acquirer limited purpose bank; and he or she meets the eligibility requirements of this chapter, the regulations of the department, and the articles and bylaws of the merchant acquirer limited purpose bank.

(b) Each director shall sign a copy of the oath required by this Code section and include such documentation in the meeting minutes. No director shall participate in the affairs of the board or receive any compensation for service as a director until such oath has been executed. Any person seeking to act in the capacity of a director before subscribing to the oath required by this Code section or otherwise qualifying for service pursuant to the bylaws of the merchant acquirer limited purpose bank or the laws and regulations governing the operations of the merchant acquirer limited purpose bank shall be liable for his or her actions to the same extent as if that person had qualified to serve as a director of the merchant acquirer limited purpose bank.

§ 7-9-6

(a) An application to the department to charter a merchant acquirer limited purpose bank shall include:

(1) Any information desired by the department in order to evaluate the proposed institution which shall be made available in the form specified by the department;

(2) A certificate of the Secretary of State showing that the proposed name of the merchant acquirer limited purpose bank has been reserved pursuant to Code Section 7-1-131; and

(3) Applicable fees established by regulation of the department to defray the expense of the investigation required by Code Section 7-9-7.

(b) An application to the department to own or control a merchant acquirer limited purpose bank shall include:

(1) Any information desired by the department in order to evaluate the proposed transaction which shall be made available in the form specified by the department; and

(2) Applicable fees established by regulation of the department to defray the expense of the investigation.

§ 7-9-7

(a)(1) Upon receipt of the articles of incorporation and the filings and fees from the applicant as required under this chapter, the department shall conduct such investigation as it may deem necessary to ascertain whether it should approve the proposed merchant acquirer limited purpose bank. The department shall approve the charter of a merchant acquirer limited purpose bank if it determines in its discretion that:

(A) The articles of incorporation and supporting items satisfy the requirements of this chapter;

(B) The character and fitness of the applicant, directors, and proposed officers are such as to warrant the belief that the business of the proposed merchant acquirer limited purpose bank will be honestly and efficiently conducted; and

(C) The capital structure of the merchant acquirer limited purpose bank is adequate in relation to the amount and character of the anticipated business of the merchant acquirer limited purpose bank.

(2) Within 90 days after receipt of the articles of incorporation and the filings and fees from the applicant as required by this chapter, the department shall approve or disapprove the charter of the proposed merchant acquirer limited purpose bank. The department may impose conditions to be satisfied prior to the issuance of its approval of the charter of a merchant acquirer limited purpose bank. If the department, in its discretion, approves the charter of the proposed merchant acquirer limited purpose bank with or without conditions, it shall deliver its written approval of the articles of incorporation and charter to the Secretary of State and notify the applicant of its action. If the department, in its discretion, disapproves the charter of the proposed merchant acquirer limited purpose bank, it shall notify the applicant of its disapproval of the charter and state generally the unfavorable factors influencing its decision. The decision of the department shall be conclusive, except that it may be subject to judicial review as provided in Code Section 7-1-90.

(b) No charter shall be issued if the department finds that the applicant, or any holding company, control person, director, officer, partner, or employee of the applicant, has been convicted of a felony in any jurisdiction or of a crime which, if committed within this state, would constitute a felony under the laws of this state. No control person, director, officer, partner, or employee of a merchant acquirer limited purpose bank shall have been convicted of a felony in any jurisdiction or of a crime which, if committed within this state, would constitute a felony under the laws of this state. For any merchant acquirer limited purpose bank that is transacting business under a charter approved by the department, the department shall have the suspension and removal powers provided for in Code Section 7-1-71 with respect to any control person, director, officer, partner, or employee of the merchant acquirer limited purpose bank who has been convicted of a felony in any jurisdiction or of a crime which, if committed within this state, would constitute a felony under the laws of this state. For the purposes of this article, a person shall be deemed to have been convicted of a crime if such person shall have pleaded guilty or nolo contendere to a charge thereof before a court or federal magistrate or shall have been found guilty thereof by the decision or judgment of a court or federal magistrate or by the verdict of a jury, irrespective of the pronouncement of sentence or the suspension thereof, and regardless of whether first offender treatment without adjudication of guilt pursuant to the charge was entered, or an adjudication or sentence was otherwise withheld or not entered on that charge, unless and until such plea of guilty or such decision, judgment, or verdict shall have been set aside, reversed, or otherwise abrogated by lawful judicial process or until probation, sentence, or both probation and sentence of a first offender have been successfully completed and documented, or unless the person convicted of the crime shall have received a pardon thereon from the President of the United States or the governor or other pardoning authority in the jurisdiction where the conviction occurred, or shall have received an official certification of pardon granted by the state's pardoning body where the conviction occurred which removes the legal disabilities resulting from such conviction and restores civil and political rights.

(c) As used in this Code section, the term “conviction data” means a record of a finding, verdict, or plea of guilty or plea of nolo contendere with regard to any crime, regardless of whether an appeal of the conviction has been sought. The department shall be authorized to obtain conviction data with respect to any applicant, holding company, merchant acquirer limited purpose bank, or person who is a control person, director, officer, partner, or employee of the applicant or merchant acquirer limited purpose bank. The department may directly submit to the Georgia Crime Information Center two complete sets of fingerprints of such person, together with the required records search fees and such other information as may be required. Fees for background checks that the department administers shall be sent to the department by applicants and merchant acquirer limited purpose banks together with such fingerprints.

(d) Upon request by the department, each applicant, holding company, or merchant acquirer limited purpose bank or any person who is a control person, director, officer, partner, or employee of the applicant or merchant acquirer limited purpose bank shall submit to the department two complete sets of fingerprints, the required records search fees, and such other information as may be required. Fees for background checks that the department administers shall be submitted to the department by applicants and merchant acquirer limited purpose banks together with two complete sets of fingerprints, and the department is authorized to net such fees to recover any costs incurred by the department related to running the background checks. Upon receipt of fingerprints, fees, and other required information, the Georgia Crime Information Center shall promptly transmit one set of fingerprints to the Federal Bureau of Investigation for a search of bureau records and an appropriate report and shall retain the other set and promptly conduct a search of its own records and records to which it has access. The Georgia Crime Information Center shall notify the department in writing of any derogatory finding, including, but not limited to, any conviction data regarding the fingerprint records check, or if there is no such finding. All conviction data received by the department or by the applicant or merchant acquirer limited purpose bank shall be used by the party requesting such data for the exclusive purpose of carrying out the responsibilities of this article, shall not be a public record, shall be confidential, and shall not be disclosed to any other person or agency except to any person or agency which otherwise has a legal right to inspect the file. All such records shall be maintained by the department and the applicant or merchant acquirer limited purpose bank pursuant to laws regarding such records and the rules and regulations of the Federal Bureau of Investigation and the Georgia Crime Information Center, as applicable.

(e) Every applicant and merchant acquirer limited purpose bank shall be authorized and required to obtain and maintain the results of background checks on employees. Such background checks shall be handled by the Georgia Crime Information Center pursuant to Code Section 35-3-34 and the rules and regulations of the Georgia Crime Information Center. Applicants and merchant acquirer limited purpose banks shall be responsible for any applicable fees charged by the Georgia Crime Information Center. An applicant or merchant acquirer limited purpose bank may only employ a person whose background data has been checked and been found to be in compliance with all lawful requirements prior to the initial date of hire. This provision does not apply to control persons, directors, officers, or partners, whose backgrounds have been investigated through the department before taking office, beginning employment, or securing ownership. Upon receipt of information from the Georgia Crime Information Center that is incomplete or that indicates an employee has a criminal record in any state other than Georgia, the employer shall submit to the department two complete sets of fingerprints for such person, together with the applicable fees and any other required information. The department shall submit such fingerprints as provided in subsection (d) of this Code section.

(f) Upon request by the department, an applicant or merchant acquirer limited purpose bank must take all steps necessary to have an international criminal history background check performed on any control person, director, officer, partner, or employee. The results of such international criminal history background check must be provided to the department.

(g) Applicants and merchant acquirer limited purpose banks shall have the primary responsibility for obtaining background checks on employees. The department shall be entitled to review the files of any applicant or merchant acquirer limited purpose bank to determine whether the required background checks have been run and whether all employees are qualified. The department shall be authorized to discuss the status of employee background checks with applicants or merchant acquirer limited purpose banks. Notwithstanding any other provisions in this article, the department shall retain the right to obtain conviction data on employees of applicants and merchant acquirer limited purpose banks.

(h) In the event the department denies an application to charter a merchant acquirer limited purpose bank or an application to own or control a merchant acquirer limited purpose bank, the applicant may submit a new application at any time following notice of final denial. The applicant shall not be prejudiced by any prior denials by the department.

§ 7-9-8

The Secretary of State shall immediately issue a certificate of incorporation to a proposed merchant acquirer limited purpose bank upon submission of:

(1) Written approval of the articles of incorporation by the department with a copy attached;

(2) An affidavit executed by the duly authorized agent or publisher of a newspaper swearing that the articles of incorporation or a summary statement publication as provided for in Code Section 7-9-5 have been published; and

(3) All required fees and charges required by law

so long as name of the proposed merchant acquirer limited purpose bank continues to be reserved or is available. The Secretary of State shall retain on file a copy of the certificate, the articles of incorporation, the department's approval of the articles of incorporation, and the publisher's certificate.

§ 7-9-9

(a) The corporate existence of the merchant acquirer limited purpose bank shall begin upon the issuance of a certificate of incorporation by the Secretary of State. Those persons who subscribed for shares prior to filing of the articles, or their assignees, shall be shareholders in the merchant acquirer limited purpose bank. The department shall have full authority to regulate and supervise the activities of promoters, incorporators, subscribers for shares, and all persons soliciting offers to subscribe for shares in any merchant acquirer limited purpose bank established under this chapter. Any corporation in the process of seeking approval of a charter as a merchant acquirer limited purpose bank shall be classified as a merchant acquirer limited purpose bank in formation and persons named in the articles of incorporation or approved by the department as initial directors of such entity shall not be considered “agents” or “broker-dealers” as defined in Code Section 10-5-2.

(b) A certificate of incorporation shall be conclusive evidence that a merchant acquirer limited purpose bank has been incorporated; however, the state may institute proceedings to dissolve, wind up, and terminate a merchant acquirer limited purpose bank in conformity with Code Section 7-1-92 and applicable provisions of this chapter.

(1) Capital stock of the merchant acquirer limited purpose bank satisfies the requirements of Code Section 7-9-11;

(2) Bylaws of the merchant acquirer limited purpose bank have been filed with the department;

(3) A registered agent and registered office for the merchant acquirer limited purpose bank has been designated in conformity with Code Section 7-1-132;

(4) The merchant acquirer limited purpose bank has been organized and is ready to begin the business for which it was incorporated;

(5) All conditions imposed by the department in giving its approval of the charter of the proposed merchant acquirer limited purpose bank under this chapter have been satisfied; and

(6) The department has received an affidavit attesting that the requirements of this subsection have been satisfied signed by the president or secretary and at least a majority of the directors of the merchant acquirer limited purpose bank.

§ 7-9-10

The applicant who charters a merchant acquirer limited purpose bank which transacts business before its capital stock have been paid in as required under this chapter shall be jointly and severally liable to creditors for the amounts not paid in by subscribers or any other deficiencies. Such liability shall be deemed an asset of the merchant acquirer limited purpose bank and may be enforced by it, its successors or assignees, by a shareholder suing derivatively, or by a receiver appointed by the department.

§ 7-9-11

A merchant acquirer limited purpose bank shall at all times maintain capital stock and paid-in surplus as required by policies of the department but in no event less than $3 million.

§ 7-9-11.1

(a) Merchant acquirer limited purpose banks may merge or consolidate upon compliance with the requirements of this chapter and other applicable laws and regulations.

(b) A corporation other than a merchant acquirer limited purpose bank may be merged into or may be consolidated with a merchant acquirer limited purpose bank, provided that:

(1) The resulting institution of the merger or consolidation is a merchant acquirer limited purpose bank;

(2) The resulting institution of the merger or consolidation holds only assets and liabilities and is engaged only in activities which may be held or engaged in by a merchant acquirer limited purpose bank; and

(3) The merger or consolidation is not otherwise unlawful.

(c) A merger or consolidation pursuant to subsection (b) of this Code section shall be made by compliance with the requirements of this chapter. Title 14 shall not be applicable to such a merger or consolidation.

(d) In the case of a merger of a merchant acquirer limited purpose bank with any other corporation or corporations, with the merchant acquirer limited purpose bank as the resulting entity, any assets, lines of business, activities, or powers which may accrue to the resulting entity which would be prohibited for a merchant acquirer limited purpose bank shall be provided for in the plan of merger. Such plan shall include a proposal for the disposal of such prohibited assets or the termination of such prohibited line of business, activity, or power. The department shall review such plan to determine whether the prohibited asset, line of business, activity, or power should be a basis for denial of the requested merger or consolidation or phased out within a reasonable period of time, which shall be determined by the department.

§ 7-9-11.2

(a) The parties to a merger or consolidation of a merchant acquirer limited purpose bank shall:

(1) Adopt a plan stating the method, terms, and conditions of the merger or consolidation, including the rights under the plan of the shareholders of each of the parties and any agreement concerning the merger or consolidation. Such plan shall specify:

(A) The name that such merchant acquirer limited purpose bank shall have upon and after such merger or consolidation;

(B) The persons who shall constitute the board of directors of the merchant acquirer limited purpose bank after the merger or consolidation;

(C) The manner and basis of converting the shares of each merged or consolidated entity into shares or other securities or obligations of the surviving merchant acquirer limited purpose bank and, if any shares of any of the merged or consolidated entities are not to be converted solely into shares or other securities of the surviving merchant acquirer limited purpose bank, the amount of cash or securities of any other corporation, or combination of cash and such securities, which is to be paid or delivered to the holders of such shares in exchange for, or upon the surrender of, such shares. Such cash or securities may be in addition to, or in lieu of, the shares or other securities of the surviving merchant acquirer limited purpose bank;

(D) Such other provisions with respect to the proposed merger or consolidation which are deemed desirable to the parties of the merger or consolidation plan; and

(E) Any other requirements of the department, adopted through rule or regulation, deemed essential to ensure protection of creditors or shareholders of the merging or consolidating entities;

(2) Adopt a merger or consolidation plan upon affirmative vote of at least:

(A) A majority of the directors; and

(B) At a meeting of shareholders, a majority of the shareholders entitled to cast votes or the majority of holders of outstanding shares of a class, if a class of shares is entitled to vote thereon as a class; and

(3) Include a copy or summary of the merger or consolidation plan and a full statement of the rights and remedies of dissenting shareholders, the method of exercising such rights, and any limitations on such rights and remedies in the meeting notice for which a merger or consolidation is to be voted upon.

(b) Any modification of a merger or consolidation plan which has been adopted shall be made by any method provided therein or, in the absence of such provision, by the same vote as required for adoption.

§ 7-9-11.3

(a) Upon adoption of the plan of merger or consolidation as provided in Code Section 7-9-11.2, parties to a merger or consolidation shall file with the department articles of a merger or consolidation pursuant to the requirements of this Code section together with the fee required by Code Section 7-1-862.

(b) The articles of merger or consolidation shall be signed by two duly authorized officers of each party to a merger or consolidation plan under their respective seals and shall contain:

(1) The names of parties to a merger or consolidation plan and the name of the resulting merchant acquirer limited purpose bank;

(2) The street address and county location of the main office and registered agent and office of each party;

(3) The votes by which the merger or consolidation plan was adopted, a copy of the notice of each meeting held in connection with such adoption, and the time and place such meeting or meetings were held;

(4) The names and addresses of the initial directors of the resulting merchant acquirer limited purpose bank;

(5) In the case of a merger, any amendments to the articles of the resulting merchant acquirer limited purpose bank;

(6) In the case of a consolidation, the requirements for articles of a new merchant acquirer limited purpose bank as provided for by paragraphs (4) through (8) of subsection (a) of Code Section 7-9-5; and

(7) The merger or consolidation plan.

(c) Together with the articles of merger or consolidation, parties to a merger or consolidation shall deliver to the department a copy of the notice of merger or consolidation and an undertaking, which may appear in the articles of merger or consolidation or be set forth in a letter or other instrument executed by an officer or any person authorized to act on behalf of such merchant acquirer limited purpose bank, that the request for publication of a notice of filing the articles of merger or consolidation and payment therefor will be made as required by subsection (d) of this Code section.

(d) No later than the next business day after filing the articles of merger or consolidation with the department, parties to a merger or consolidation shall transmit for publication, to the publisher of a newspaper which is the official organ of the county where the main office of each party is located, a notice which shall contain a statement that the articles of merger or consolidation have been filed with the department, the names of entities which are parties to the proposed merger or consolidation, and, in the case of a merger, the proposed name of the surviving merchant acquirer limited purpose bank. The parties shall include in the notice a designated location where a copy of the articles of merger or consolidation may be examined. Such notice shall be published once a week for two consecutive weeks commencing within ten days after receipt of the notice by the newspaper.

(e) In the event a merger or consolidation plan is amended as provided for in Code Section 7-9-11.2, parties shall promptly file with the department an amendment to the articles of consolidation or merger reflecting such amendment of the merger or consolidation plan.

§ 7-9-11.4

In addition to the filing of articles of merger and consolidation under Code Section 7-9-11.3, the parties to a merger or consolidation plan shall also file with the department:

(1) An application including any information desired by the department in order to evaluate the proposed merger or consolidation, which shall be made available in the form specified by the department;

(2) Applicable fees established by regulation of the department to defray the expenses of the investigation required by Code Section 7-9-11.5; and

(3) If the merger or consolidation involves the adoption of a new name, a certificate issued by the Secretary of State reserving such name under Code Section 7-1-131.

§ 7-9-11.5

(a) Upon receipt of the articles of merger or consolidation and the filings required by Code Section 7-9-11.4, the department shall conduct such investigation as it may deem necessary to ascertain whether:

(1) The articles of merger or consolidation and supporting items satisfy the requirements of this chapter;

(2) The merger or consolidation plan and any modification thereof adequately protect the interests of creditors and shareholders;

(3) The requirements for a merger or consolidation under all applicable laws have been satisfied and the resulting merchant acquirer limited purpose bank would satisfy the applicable requirements of this chapter; and

(4) The merger or consolidation would not adversely impact the merchant acquirer limited purpose bank, entities engaged in merchant acquiring activities or settlement activities, or the payment card network. In making such a determination, the department will take into consideration competitive, financial, managerial, safety and soundness, compliance, and other concerns with respect to the merger or consolidation plan and all parties.

(b) Within 90 days after receipt of the articles of merger or consolidation and the filings required by Code Section 7-9-11.4 or within an additional period of not more than 30 days after an amendment to the application is received within the initial 90 day period, the department shall, in its discretion, approve or disapprove such articles on the basis of its investigation and the criteria set forth in subsection (a) of this Code section. Except as provided in Code Section 7-9-11.6, the department shall provide written notice of its approval along with a copy of the articles of merger or consolidation to the Secretary of State. The department shall provide parties to the merger or consolidation plan written notice of its decision and, in the event of disapproval, a general statement of explanation for its decision. The decision of the department shall be conclusive; provided, however, that such decision may be subject to judicial review as provided for in Code Section 7-1-90.

§ 7-9-11.6

Upon payment of all required taxes, fees, and charges, the Secretary of State shall issue to any resulting merchant acquirer limited purpose bank a certificate of merger or consolidation with the approved articles of merger or consolidation attached thereto, provided that the name of the resulting merchant acquirer limited purpose bank in a merger or consolidation has been reserved by a merging or consolidating party or is available on the records of the Secretary of State. The resulting merchant acquirer limited purpose bank shall retain a copy of such certificate, articles, and approval by the department.

§ 7-9-11.7

(a) A merger or consolidation of a merchant acquirer limited purpose bank shall become effective upon the issuance of a certificate of merger or consolidation by the Secretary of State.

(b) A certificate of merger or consolidation shall be conclusive evidence of satisfactory performance of all conditions precedent to a merger or consolidation and of the existence or creation of a merchant acquirer limited purpose bank, except as against the state.

(c) When a merger or consolidation becomes effective, each party to the merger or consolidation plan, except the resulting merchant acquirer limited purpose bank, shall cease to exist as a separate entity. Upon merger or consolidation, any parties to a merger or consolidation plan shall become a single corporation which shall be the merchant acquirer limited purpose bank and which shall have, without further act or deed, all property, rights, powers, duties, and obligations of each party to a merger or consolidation plan.

(d) The articles of a resulting merchant acquirer limited purpose bank established from a merger shall be the same as its articles prior to the merger with any change stated in the articles of merger. The articles of a resulting merchant acquirer limited purpose bank established from a consolidation shall be the same as its articles prior to the consolidation with any change stated in the articles of consolidation.

(e) A resulting merchant acquirer limited purpose bank shall be authorized to engage only in such business and exercise only such powers as are then permissible upon original incorporation under this chapter and shall be subject to the same prohibitions and limitations as it would then be subject to upon original incorporation.

(f) No liability of any party to a merger or consolidation plan or of its shareholders, directors, or officers shall be affected nor shall any lien on any property of a party to the plan be impaired by a merger or consolidation. Any claim existing or action pending by or against any party to a merger or consolidation plan may be prosecuted to judgment as if a merger or consolidation had not taken place or a resulting merchant acquirer limited purpose bank may be substituted in place of such appropriate party of a plan of proposed merger or consolidation.

§ 7-9-11.8

(a) A shareholder of a merchant acquirer limited purpose bank which is a party to a plan of proposed merger or consolidation under this chapter who objects to such plan shall be entitled to the rights and remedies of a dissenting shareholder as determined under Chapter 2 of Title 14, known as the “Georgia Business Corporation Code.”

(b) A resulting merchant acquirer limited purpose bank into which other or others have been merged or consolidated may require the return of original certificates of stock held by each shareholder in each or either of the merged or consolidated institutions, or in lieu thereof may:

(1) Issue to each shareholder new certificates for such number of shares of the resulting acquirer limited purpose bank; or

(2) Cause to be paid or delivered to each shareholder the amount of cash or securities of any other corporation or combination of cash and such securities as, under the plan of merger or consolidation, such shareholder is entitled to receive.

§ 7-9-12

(a) A merchant acquirer limited purpose bank shall only accept deposits from a corporation that owns a majority of the shares of the merchant acquirer limited purpose bank. A merchant acquirer limited purpose bank shall not operate in any manner that attracts depositors from the general public, and no deposit shall be withdrawn by the depositor by check or similar means for payment to third parties or others. A merchant acquirer limited purpose bank shall not accept “brokered deposits” as that term is defined in the Federal Deposit Insurance Act as such existed on January 1, 2012, or the regulations adopted by the Federal Deposit Insurance Corporation in force and effect on January 1, 2012.

(b) A merchant acquirer limited purpose bank shall conduct its deposit-taking activities only from a single location within this state.

(c) A merchant acquirer limited purpose bank may apply to receive deposit insurance from the Federal Deposit Insurance Corporation or its successor agency.

(d) Notwithstanding subsection (a) of this Code section, the business conducted by a merchant acquirer limited purpose bank shall be merchant acquiring activities.

(e) A merchant acquirer limited purpose bank shall not engage in self-acquiring activities.

§ 7-9-12.1

(a) All merchant funds shall constitute a trust fund until paid to the individual merchant. A merchant acquirer limited purpose bank shall have a fiduciary duty to preserve and account for merchant funds, and merchant acquirer limited purpose banks shall be liable for merchant funds.

(b) All merchant funds shall be deposited immediately by the merchant acquirer limited purpose bank and shall remain in an account at a financial institution that is federally insured and authorized to do business in this state until paid over to the individual merchant; provided, however, that nothing in this Code section shall preclude a merchant acquirer limited purpose bank from making appropriate deductions for chargebacks, fees, reserves, and other costs related to providing authorized merchant acquiring services owed by the individual merchant prior to remitting the net amount to the individual merchant. At the time of deposit into the account, the funds of the individual merchant in the account shall be deemed to be the property of the individual merchant. The merchant acquirer limited purpose bank shall maintain account records that identify individual merchants and the total amount held for each individual merchant. Such records shall be maintained in good faith and in the ordinary course of business and in a manner that can be readily ascertained.

§ 7-9-13

(a) All merchant acquirer limited purpose banks chartered by the department shall be subject to supervision, regulation, and examination by the department, including, but not limited to, the examination powers as provided in Code Sections 7-1-64 through 7-1-73, and the department shall have all enforcement powers provided in this title.

(b) In the event any chartered merchant acquirer limited purpose bank does not conduct its activities within the limitations provided in Code Section 7-9-12, the department may require such merchant acquirer limited purpose bank to cease all unauthorized activities. In the event such chartered merchant acquirer limited purpose bank fails to abide by such order, the department may:

(1) Impose upon the chartered merchant acquirer limited purpose bank or its parent holding company a penalty of up to $10,000.00 per day for each day such order is violated; and

(2) Require divestiture of such chartered merchant acquirer limited purpose bank by any holding company not qualified to acquire such chartered merchant acquirer limited purpose bank on the date it ceased to operate within the limitations imposed by Code Section 7-9-12 and became a bank for purposes of this title.